Lawrence Thompson, $60$ years old recently retired and received a $$25$M cash payment from his

employer as an early retirement incentive. He also obtained $$8,000,000$ by exercising his

company stock options. Both amounts are net of tax. Thompson is not entitled to a pension;

however, his medical expenses are covered by insurance paid for by his former employer. He is

in excellent health and has a normal life expectancy.

Thompson has no assets other than the $$35$ million cash referenced above, and he has no debts.

Thompson$$s living expenses will be $$120,000$ per month and will rise with inflation. He does not

plan to work again.

Required

$1.$ Create an IPS for the assigned client.

$2.$ Design strategic asset allocation plan based on IPS.

$3.$ Determine investment approach, passive or active with rationale $($include expected value

and expected standard deviation$).$

$4.$ Execute asset allocation decision.

$5.$ Develop monitoring and rebalancing plan.

$6.$ You may use the capital market expectations from the group project

$7.$ A spread sheet outlining: initial investment, all transaction costs, any dividends or interest

payments, capital gains$/$loss$,$ and all tacit asset allocation changes to the portfolio.

$8.$ All transaction dates to be recorded.

$9.$ Compute portfolio; Mean, Standard deviation, Sharp Ratio, Jensen$$s Alpha and Treynor

Ratio.

$10.$ Complete analysis and summary of portfolio.

Answer rating: 100% (QA)

Creating a comprehensive investment plan and portfolio analysis requires a detailed analysis of various factors and assumptions Due to the complexity and length of the task it is not feasible to provi... View the full answer