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Jane Smith A

This document is an investment policy statement for a client named Jane Smith. It outlines her financial situation including assets of $1.7 million, salary of $200k, and retirement savings. Her goals are funding her sons' education and retirement planning. It evaluates asset allocation proposals with different risk levels measured by standard deviation and expected returns. Proposal C has the highest expected return of 9.95% and meets her return requirement while proposal D has too much risk of a 10% decline.

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183 views4 pages

Jane Smith A

This document is an investment policy statement for a client named Jane Smith. It outlines her financial situation including assets of $1.7 million, salary of $200k, and retirement savings. Her goals are funding her sons' education and retirement planning. It evaluates asset allocation proposals with different risk levels measured by standard deviation and expected returns. Proposal C has the highest expected return of 9.95% and meets her return requirement while proposal D has too much risk of a 10% decline.

Uploaded by

dreamvikram
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Beta 1

Rf 5% Rr 0.195
Rm 20%

Actual Return
10% -10%
12% -8%
15% -5%
8% -12%
= (0.5)(10) + (0.5)(6) = 8%

10
= (0.00171)1/2 = 4.12%

80%
IPS - Investment Policy Document

A Investment Objectives
Return Expectations
Risk
B Lifecycle Analysis
Name Jane Smith
Job Sr VP of Marketing
Age 50

C Financial Condition
Balance Sheet / Cashflow
Stocks Owned $250,000
Salary $200,000
Inidvidual Saving $350,000
RRSP - retirement fund $400,000
Defined contribution plan 5% of salary invested every year
5% firms contribution
$650,000
RRSP profile savings account
Short term certificates of deposits
guaranteed investment certificates
House $450,000
D Goal Sheet
Dependents 2
#1 Send the boys for university education
#2 Pension / Retirement planning
E Liquidity Requirement
#1 Education of her sons
#2 Unique need / preferances
F Constraints
International
G Benchmarking Information
H Capital Market Forecast

E ( R)
money market 4%
corporate bonds 8%
canadian stocks 12.50%
US stocks 12%
international stocks 13%
projected total return
expected standard deviation
Return Requirement Match
9%
10% decline in value

Company BestVal recently listed


Beta 1

BestVal

CD's
GIC's

ity education

Exhibit 1
ASSET MIX PROPOSALS
SD A B C D E
3% 25% 10% 20% 25% 10%
10% 10% 40% 20% 30% 30%
20% 35% 30% 30% 5% 20%
15% 30% 10% 10% 40% 30%
22% 0% 10% 20% 0% 10%
9.8% 9.85% 9.95% 8.83% 10.20%
n/a 9.75% 11.00% 8.50% 10.00%
yes yes yes no yes
no

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