Description
Unit: Portfolio Construction
Due Date: Wed,10/31/18
Grading Type: Numeric
Points Possible: 150
Points Earned: 0
Deliverable Length: 1,200–1,500 words
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Assignment Details
Assignment Description
Key Assignment Draft
Part 1 Tasks
In general terms, discuss how the following should be taken into consideration when constructing an investment portfolio:
- Age
- Income
- Debt level and assets
- Marital status
- Parental status
- Risk tolerance
- Time horizon
- General economic conditions
Part 2 Tasks
Task 1
Discuss the efficient market hypotheses, and answer the following question:
- Does this hypothesis support active trading or buying a passive stock index fund?
Task 2
- Discuss several pieces of legislation that were enacted to protect against unethical investing practices.
Task 3
To illustrate your knowledge of portfolio construction, design a portfolio based on the following scenario:
- Robert and Susan Jenkins have inherited $200,000. They are aggressive investors with a joint annual income of $100,000, no debt, and an additional $500,000 in assets other than the $200,000 inheritance.
Design 2 separate $200,000 portfolios based on the following scenarios:
- The couple has 3 children between the ages of 9 and 17 years old, and they will use this money to pay for their college education.
- The couple will use the money to help fund retirement in 35 years.
When designing your portfolios, be sure to keep the following in mind:
- Each portfolio should contain at least 3 common stocks, 1 American Depositary Receipt (ADR) that you researched, and 3 bonds.
- Leaving a portion of the portfolio in cash is an option if you feel that is it appropriate.
- Charts and graphs should be used where appropriate.
- Portfolio models should be based on the Jenkins’ demographic profile and time horizon.
Be sure to include the following in your discussion:
- Reasons for your investment choices
- Stock and bond investment risk and return factors
- The security market line
- Beta and standard deviation
- Bond duration and interest rates
Please submit your assignment.
For assistance with your assignment, please use your text, Web resources, and all course materials.
Reading Assignment
http://careered.libguides.com/ctu/FINC320 Locate the tab with the same name as the unit.
Assignment Objectives
- Assess ethical issues in investing.
- Design a stock portfolio to minimize risk and maximize return.
- Examine international investment opportunities.
- Explain the Efficient Market Hypothesis.
Other Information
Instructor's Comments:
This submission should be in APA essay format containing specific recommendations, assumptions made and reasoning used. REMEMBER: the project is to be based on the scenario in the Unit 4 and 5 IP project description ---- no class member’s submission will be identical because you might all make different assumptions in your decision making process while making recommendations! ALSO – students often forget to add a chart or graph visually illustrating the portfolios designed. SEE EXAMPLES of portfolio illustrations in the UNIT 4 learning material area.
The primary thing is to illustrate learning in each of subject areas AND you can use some creativity as it relates to your understanding of the scenario to ensure that you develop a robust plan for your clie
Explanation & Answer
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Running head: INVESTMENT PORTFOLIO
1
Investment Portfolio
Name
Course
Tutor
Date
INVESTMENT PORTFOLIO
2
Investment Portfolio
Part I task
Age
Age is a very vital factor that every single investor has to consider when he or she has
considerations of investing; therefore, age plays a vital role in how the investor chooses to invest.
investment portfolio has a tendency of changing over and over a given lifespan of the person of
interest, therefore an investor has to take very decisive actions that inform the ratio of investment
on bond and stock and bond that affects the income and expenses of the given firm. An important
consideration falls on those investors who choose to invest on their young kids since they have to
work with very aggressive and tight portfolio that will be heavy on the equities of interest thus
assuring a steadily ground especially when an investor is keen on market fluctuation (Sridharan,
Uma, Lori & Royce 2002):
When the above considerations are made the investing parent enjoys higher returns that
enable them to cater for their expenses and support their lives. For young upcoming adults, they
should consider taking up a more aggressive portfolio that will ensure they accumulate wealth
that will be vital for their future. Good examples of where the young adult focus should be are on
real estate, the stock of different firms as these investments have a high payout that comes in at a
specified period. The mature adults in most cases have a higher earning power, therefore, they
do not need an aggressive portfolio rather they need a conservative portfolio that will enable
them to maximize on what they earn and this investment should be risk free, a good example is
on ponds as they have 100% sure security due to their returns. Retirement age should be keen
and invest in a portfolio that ensures that they preserve individual’s wealth.
INVESTMENT PORTFOLIO
3
Income
Income is a very vital parameter since it gives individu...