Mr$.$ A$.$ Smith is a $28-$year$-$old college graduate who holds a steady job as a valued employee in a blue$-$chip company. He is married with two young children. In the few years that he has been working he has built up two $($$$2$ m$)$ cash reserves in the bank. He also has adequate insurance coverage. Mr Smith has a moderate to high risk profile depending on the type of investment. His current short term and long$-$term goal is to acquire a house and car and build a long term retirement fund and college fund for his children.

Client No $2.$

Mr$.$ B$.$ Philips is $60$ years of age and is planning to retire in the next four years. He is in excellent health, pursues a simple but active lifestyle, and has two adult children. He has interest in a private company for $$20$ million. As part of his estate planning he has decided that he will donate half of this to a charity upon his death. He now realizes that an appropriate investment policy and asset allocations are required if his goals are to be met through investment of his considerable assets. Mr$.$ Philips has a conservative to moderate risk preference. Currently, the following assets are available for use in building an appropriate portfolio for him:

$$10\mathrm{.}0$ million cash $($from sale of the private company interest, net of a $$10$ million that he planned to give to charity$)$

$$10\mathrm{.}0$ million stocks and bonds $($$$5$ million each$)$

$ $5\mathrm{.}0$ million in investment property $($now fully leased$)$

$ $10\mathrm{.}0$ million value of his residence

$$35\mathrm{.}0$ million in total available assets

Required:

a$.$ Formulate and justify an investment policy statement for each investor setting forth the appropriate guidelines within which future investment actions should take place. Your policy statement should encompass all relevant objective and constraint considerations.

b$.$ Recommend and justify a long$-$term asset allocation that is consistent with the investment policy statement you created in Part a$.$ Briefly explain the key assumptions you made in generating your allocation.

NB$.$ An assessment of each investor current situation should be given in order to develop an appropriate investment strategy.

Your policy statement for your client should address the following specifics

Objectives of the investment strategy

$-$ Return requirement

$-$ Risk Tolerance

Constraints

$-$ Time Horizon

$-$ Liquidity requirement

$-$ Taxes

$-$ Legal and regulatory

$-$ Unique circumstances

Written papers should be formatted using the APA style. That is$,$ it should be typed double line space $($size $12$ font$),$ including table of contents, appropriate sub$-$headings and properly referenced.

The oral presentation should be a summary of your written paper. It should highlight key aspects of your written report. Marks will be awarded for quality of the presentation, creativity and use of visual aids.

A written paper formatted in the APA style should be presented at the start of presentation DETAILING the group$$s analysis. Each group will be required to do an oral presentation no longer that $20$ minutes SUMMARIZING their findings. This group assignment will contribute a maximum of $20\%$ towards your final grade for this course. Please see the assessment scheme below.

Written Paper $25\%$

Oral Presentation $15\%$

Total $40\%$