UNIT ONE: Writing Assignment

DIRECTIONS: Here is the Unit One Writing Assignment. You should submit to your Unit One Writing Assignment to your Unit One Writing Assignment Folder. Please submit your Unit One Writing Assignment in MS Word format with the following file name: LastNameFirstInitial_Unit01_Writing Assignment.docx. For example, if you name is John Smith, the file name of your Answer Sheet should be SmithJ_Unit01_Writing Assignment.docx.

Using the APA Guidelines outlined in the syllabus write an Investment Policy Statement (about 300 to 600 words) for the hypothetical client described below.

For your convenience, here is the link to a sample Investment Policy Statement: http://www.raymondjames.com/integrewm/pdfs/Sample_IPS.pdf

If you have any questions or comments, please do not hesitate to contact me.

THE SITUATION: You are a Research Analyst working for a top portfolio management firm, "UMUC Portfolio Management" (in no way affiliated with the University of Maryland, University College). A high-net-worth client has approached your firm with the objective of finding an analyst qualified to manage their large portfolio. Your firm has selected several of its analysts to develop test portfolios in order identify the best person to manage the portfolio of this rich client. You have been selected by your firm to develop a 52-week trial portfolio to present to the client. Because of the importance of this client (and their potentially large investment) your fee for demonstrating superior portfolio selection and management skill will be substantial. The analyst with the best report will become the portfolio manager for this high-net-worth client's portfolio (valued at over $100 million). Your portfolio management investment policy statement (IPS) will be submitted directly to your firm's high-net-worth client with the approval of your firm's Board of Directors. The success of your recommendations will determine the success of your firm in landing this large investor. (It is expected that your portfolio recommendations will not be the same as those reached by other analysts). You should do a market wide financial evaluation to determine the current situation, best investment course, appropriate asset allocation for this important client.

YOUR INVESTMENT POLICY STATEMENT (IPS): Your investment policy statement should state how your selection of investments will account for the following:

Risk: The fact pattern does not provide information about the client?s risk tolerance. However, due to the short time horizon the client will be likely to take on more risk than usual. (Risk and return, sector analysis, performance rankings.)

Return objectives: You are in competition with others to provide as high a return as possible in five-weeks. (Earning forecasts, P/E ratios, and industry comparisons, etc.)

Investment constraints: (1) you cannot purchase the S & P 500 Index, (2) you cannot purchase bond funds, (3) you cannot purchase mutual funds or bond funds (3) you cannot trade securities during the 52-week holding period and (4) bonds cannot be purchased on CBOE. You will have to simulate your purchase of bonds using Yahoo! Finance or another source and track the purchase on your tracking spreadsheet.

Taxes: The short holding period (52-weeks) reduces the impact of taxes.

Your investment theory: Some financial advisers start with a portfolio theory then apply it to all clients. Other financial advisers start with the client and base the portfolio on the client?s wants and desires. What investment theory will you use when selection securities for the client?

UNIT #1 INTRODUCTION TO INVESTMENTS

WEEKLY QUIZ ANSWER SHEET

DIRECTIONS: Here is the Unit #1 Weekly Quiz Answer Sheet that you should submit to your Unit #1 Homework Assignment Folder.

Please submit your Unit #1 Quiz Answer Sheet in MS Word format with the following file name: LastNameFirstInitial_Unit 01_QuizAnswerSheet.docx. For example, if you name is John Smith, the file name of your Answer Sheet should be SmithJ_Unit01_QuizAnswerSheet.docx.

If you have any questions or comments, please do not hesitate to contact me. NAME: _____________________________________

Question Number	Question
1	Describe and Investment Policy Statement (IPS): An IPS details the organization?s procedures for all client investments An IPS is created by the Board of Trustees An IPS is a FINRA required document An IPS addresses the objectives of the client or pension plan
2	Which of the following are deposit-taking institutions (DTIs)? Building societies Insurance companies Investment trust companies Retail banks Pension funds DTIs are the following:

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	A. 2-4 B. 1and4 C. 1and2 D. 3?5
3	An IPS will address the client?s risk level in all of the following except: Risk Capacity Risk Required Risk Tolerance Risk Avoidance
4	Which of the following is the reason why economic sticklers would not consider shares / equities as financial instruments: Shares represent part-ownership in the company and are not redeemable Companies can re-purchase their shares Preferred shares are closer to debt instruments Companies can have debt and shares, they are substitutes for each other
5	Which of the following are functions of a financial system? The operation of a payment system Providing the means of portfolio adjustment Helping to reduce unemployment Channelizing fund between lenders and borrowers Helping speculators to bet on price movements Functions of a financial system include:

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	A. 1,2,and4 B. 2,3,and5 C. 2 - 5 D. 1and5
6	Which of the IPS?s factors would change if the client went to another financial professional? A. Investment strategies B. Amount invested by the client C. Responsibility for the risk management D. Client objectives
7	Derivatives can be strictly defined as Financial instruments Securities with strong economic foundations Contracts that may lead to profits or losses Representatives of ?claims? of holders on issuers
8	Which one of the following is the definition of an Investment Policy Statement (IPS)s: A. Specific document to govern investing activities B. An agreement about services and prices C. An engagement letter for investing services D. Protects the client from investment losses
9	Constructing and IPS is the responsibility of A. Financial professional B. Investor

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	C. Financial professional and investor D. Portfolio manager
10	How would you classify an Exchange Traded Fund (ETF)? Collective investment scheme (CISs) Alternative investments Contractual intermediaries Quasi-financial intermediaries (QFTs)
11	The most important component of an IPS is: Statement of purpose Investment objectives and constraints C. Appendices D. Signature of the investor
12	Which of the following are characteristics of a financial intermediary? Introduces borrowers to lenders Has assets which exceed liabilities Increases liquidity for lenders Reduces transaction costs for borrowers and lenders The financial intermediary: 2and3 1 only 1,4,and5 3and4

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FINC 340: INVESTMENTS UNIT #1 INTRODUCTION TO INVESTMENTS WEEKLY QUIZ ANSWER SHEET DIRECTIONS: Here is the Unit #1 Weekly Quiz Answer Sheet that you should submit to your Unit #1 Homework Assignment Folder. Please submit your Unit #1 Quiz Answer Sheet in MS Word format with the following file name: LastNameFirstInitial_Unit 01_QuizAnswerSheet.docx. For example, if you name is John Smith, the file name of your Answer Sheet should be SmithJ_Unit01_QuizAnswerSheet.docx. If you have any questions or comments, please do not hesitate to contact me. NAME: _____________________________________ Question Number 1 Question Describe and Investment Policy Statement (IPS): A. An IPS details the organization's procedures for all client investments B. An IPS is created by the Board of Trustees C. An IPS is a FINRA required document D. An IPS addresses the objectives of the client or pension plan 2 Which of the following are deposit-taking institutions (DTIs)? 1. Building societies 2. Insurance companies 3. Investment trust companies 4. Retail banks 5. Pension funds DTIs are the following: 1 A. 2 - 4 B. 1 and 4 C. 1 and 2 D. 3 - 5 3 An IPS will address the client's risk level in all of the following except: A. Risk Capacity B. Risk Required C. Risk Tolerance D. Risk Avoidance 4 Which of the following is the reason why economic sticklers would not consider shares / equities as financial instruments: A. Shares represent part-ownership in the company and are not redeemable B. Companies can re-purchase their shares C. Preferred shares are closer to debt instruments D. Companies can have debt and shares, they are substitutes for each other 5 Which of the following are functions of a financial system? 1. The operation of a payment system 2. Providing the means of portfolio adjustment 3. Helping to reduce unemployment 4. Channelizing fund between lenders and borrowers 5. Helping speculators to bet on price movements Functions of a financial system include: 2 A. 1, 2, and 4 B. 2, 3, and 5 C. 2 - 5 D. 1 and 5 6 Which of the IPS's factors would change if the client went to another financial professional? A. Investment strategies B. Amount invested by the client C. Responsibility for the risk management D. 7 Client objectives Derivatives can be strictly defined as A. Financial instruments B. Securities with strong economic foundations C. Contracts that may lead to profits or losses D. Representatives of \"claims\" of holders on issuers 8 Which one of the following is the definition of an Investment Policy Statement (IPS)s: A. Specific document to govern investing activities B. An agreement about services and prices C. An engagement letter for investing services D. Protects the client from investment losses 9 Constructing and IPS is the responsibility of A. Financial professional B. Investor 3 C. Financial professional and investor D. Portfolio manager 10 How would you classify an Exchange Traded Fund (ETF)? A. Collective investment scheme (CISs) B. Alternative investments C. Contractual intermediaries D. Quasi-financial intermediaries (QFTs) 11 The most important component of an IPS is: A. Statement of purpose B. Investment objectives and constraints C. Appendices D. Signature of the investor 12 Which of the following are characteristics of a financial intermediary? 1. Introduces borrowers to lenders 2. Has assets which exceed liabilities 3. Increases liquidity for lenders 4. Reduces transaction costs for borrowers and lenders The financial intermediary: A. 2 and 3 B. 1 only C. 1, 4, and 5 D. 3 and 4 4