You work as a personal financial adviser in a small town in Nova Scotia Today you have an initial meeting with your new clients the family of Pamela, 40 years old, and Isaac, 45 years old They present you with the following information Financial data Monthly Income $6,800 Living Expenses $4,900 Assets $235,000 Liabilities $52,000 Emergency fund $7,000 Financial Goals Evaluate current financial conditions Build an investment portfolio that considers various risk factors With approximately 20 years to retirement, Pamela and Isaac McDonald want to establish a more aggressive investment program to accumulate for their long term financial needs Isaac has a retirement program at work This money, about $75,000, is invested in various conservative mutual funds and government bonds according to the funds policy (Isaac chooses to keep it in a conservative investment portfolio to make sure he does not lose all this fund) At home, they are having another investment fund between them, which is worth $25,000, currently buying GICs and putting in various bank deposits In addition to their investment program, the McDonalds have accumulated $12,000 to help pay for childrens education They have two daughters, aged 7 and 10 And they have $7,000 tucked away in a savings account that serves as the familys emergency fund Finally, both will qualify for the Canadian Pension Plan when they reach retirement age Questions Evaluate the current financial position of McDonalds family at this stage in their life What investment goals would be most appropriate for this middleaged couple What level of risk should they take ( 6 marks ) Pamela and Isaac have spent time studying the investment market recently In specific, they are interested in the following securities Suncor Energy Inc (SU TO) and Bank of Montreal (BMO TO) stock 5 year Canadian government bond Isaac, listening to one of his high school friends who is now working for an investment bank, thinks that they should invest in an emerging market fund this year, and the broker recommends Vanguard Emerging Markets Stock Index Fund (VEIEX) (mutual fund, USD) and the iShares Core MSCI Emerging Markets ETF (IEMG) (ETF, USD) The broker warns them that they will face foreign exchange risk if they choose to invest in these mutual funds ETFs At their requests, you are required to perform the following tasks Plot the weekly return of Suncor Energy Inc (SU TO) stock, the return of Bank of Montreal (BMO TO) and the return of the S P TSX Composite Index for the period from Jan 1 st 2017 to Jan 1 st 2022 on the same graph Calculate the beta of SU TO and BMO TO use the data you have Explain the graph to the McDonald, compare SU TO return to BMO TO return, compare them to the markets return and explain the risk involved Which stock is considered riskier and why ( 12 marks ) Plot the weekly bond yield of the 5 year Canadian government bond from 01 January 2017 to 31 December 2021 Comment on the bonds risk and return and compare this investment with stock market investment in part (a) ( 5 marks ) Pamela and Isaac would like to choose one mutual fund ETF out of the two options listed They are not sure how to compare them Plot the weekly return of VEIEX and IEMG for the period from Jan 1 st 2017 to Jan 1 st 2022 on the same graph You should also compare the funds on other aspects (fee, return, risk, asset mix, top 10 investments, country exposure, etc ) What is one advantage of investing in a mutual fund compared to investing in a single stock or bond Do you think these are good mutual funds to invest in now given their objectives What are the differences between these two Which one should they choose, if any ( 10 marks ) After analyzing McDonalds financial situation, their investment goals, and the securities they are interested in, you are asked to give them advice on what course of action they should take regarding their investment portfolio Explain your rationale ( 4 marks ) Besides the investment portfolio advice on question 3, what is some additional advice on other aspects of personal financial planning that you can give to this couple ( 3 marks )

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You work as a personal financial adviser in a small town in Nova Scotia. Today you have an initial meeting with your new clients: the

You work as a personal financial adviser in a small town in Nova Scotia. Today you have an initial meeting with your new clients: the family of Pamela, 40 years old, and Isaac, 45 years old. They present you with the following information:

Financial data:
- Monthly Income: $6,800
- Living Expenses: $4,900
- Assets: $235,000
- Liabilities: $52,000
- Emergency fund: $7,000
Financial Goals:

Evaluate current financial conditions

Build an investment portfolio that considers various risk factors

With approximately 20 years to retirement, Pamela and Isaac McDonald want to establish a more aggressive investment program to accumulate for their long-term financial needs. Isaac has a retirement program at work. This money, about $75,000, is invested in various conservative mutual funds and government bonds according to the funds policy (Isaac chooses to keep it in a conservative investment portfolio to make sure he does not lose all this fund). At home, they are having another investment fund between them, which is worth $25,000, currently buying GICs and putting in various bank deposits. In addition to their investment program, the McDonalds have accumulated $12,000 to help pay for childrens education. They have two daughters, aged 7 and 10. And they have $7,000 tucked away in a savings account that serves as the familys emergency fund. Finally, both will qualify for the Canadian Pension Plan when they reach retirement age.

Questions:

Evaluate the current financial position of McDonalds family at this stage in their life. What investment goals would be most appropriate for this middleaged couple? What level of risk should they take? (6 marks)

Pamela and Isaac have spent time studying the investment market recently. In specific, they are interested in the following securities: Suncor Energy Inc. (SU.TO) and Bank of Montreal (BMO.TO) stock; 5-year Canadian government bond. Isaac, listening to one of his high school friends who is now working for an investment bank, thinks that they should invest in an emerging market fund this year, and the broker recommends Vanguard Emerging Markets Stock Index Fund (VEIEX) (mutual fund, USD) and the iShares Core MSCI Emerging Markets ETF (IEMG) (ETF, USD). The broker warns them that they will face foreign exchange risk if they choose to invest in these mutual funds/ETFs.

At their requests, you are required to perform the following tasks:

Plot the weekly return of Suncor Energy Inc. (SU.TO) stock, the return of Bank of Montreal (BMO.TO) and the return of the S&P/TSX Composite Index for the period from Jan 1^st 2017 to Jan 1^st 2022 on the same graph. Calculate the beta of SU.TO and BMO.TO use the data you have. Explain the graph to the McDonald, compare SU.TO return to BMO.TO return, compare them to the markets return and explain the risk involved. Which stock is considered riskier and why? (12 marks)

Plot the weekly bond yield of the 5-year Canadian government bond from 01 January 2017 to 31 December 2021. Comment on the bonds risk and return and compare this investment with stock market investment in part (a). (5 marks)

Pamela and Isaac would like to choose one mutual fund/ETF out of the two options listed. They are not sure how to compare them. Plot the weekly return of VEIEX and IEMG for the period from Jan 1^st 2017 to Jan 1^st 2022 on the same graph. You should also compare the funds on other aspects (fee, return, risk, asset mix, top 10 investments, country exposure, etc.). What is one advantage of investing in a mutual fund compared to investing in a single stock or bond? Do you think these are good mutual funds to invest in now given their objectives? What are the differences between these two? Which one should they choose, if any? (10 marks)

After analyzing McDonalds financial situation, their investment goals, and the securities they are interested in, you are asked to give them advice on what course of action they should take regarding their investment portfolio. Explain your rationale. (4 marks)

Besides the investment portfolio advice on question 3, what is some additional advice on other aspects of personal financial planning that you can give to this couple? (3 marks)