Assignment: Equity Analyst Project: Individual Asset Allocation Exercise

Purpose

To enable the student to demonstrate proficiency in the first stage of a top-down, three-stage valuation analysis: analysis of investment prospects in the U.S. macroeconomy.

Overview

This individual assignment involves an analysis of general economic conditions or systematic risk, i.e., the risk that affects all industries and companies, in the U.S. macroeconomy. You will be asked to determine in percentage terms an optimal allocation of $1,000,000 among the following three asset classes: U.S. equities, U.S. Treasury bonds, and cash. The goal is to maximize your expected return over the next 12 months. You will be asked to write a 1- to 2-page business brief providing your analysis of the asset classes' prospects and your justification of your allocation among them.

Action Items

Read the Equity Analyst Project document that your professor will distribute during Week 1.

Conduct any necessary research so that you can make a proper analysis.

Review Business Brief Guidelines and Critical Thinking Process.

Write a 1- to 2-page business brief that includes the following sections.( Economic Forecast, Why did you allocate assets, which class of investment will you prefer and why, what drives it up and down)

Opening: Discussion of the general economic conditions in the U.S. macroecomony.

Analysis: Discussion on analysis of the economic conditions and risk.

Recommendation: What is your recommendation and justification for, in percentage terms, of an optimal allocation of $1,000,000 among the three asset classes (Stock,Bond, and Cash).

Questions for Individual Asset Allocation Exercise:

1. Allocate your fictional $1,000,000 among the following three asset categories:

Asset	U.S. Equities	U.S. 30-Year Treasury Bonds	Cash
Allocation				100%

2. Justify your allocation based on your outlook for systematic risk in the U.S. economy over the next year.