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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: $10.0 million cash (from sale of the private company interest, net of a $10 million that he planned to give to charity) $10.0 million stocks and bonds ($5 million each) $5.0 million in investment property (now fully leased) $ 10.0 million value of his residence $35.0 million in total available assets Required: 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.

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: $10.0 million cash (from sale of the private company interest, net of a $10 million that he planned to give to charity) $10.0 million stocks and bonds ($5 million each) $5.0 million in investment property (now fully leased) $ 10.0 million value of his residence $35.0 million in total available assets Required: 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.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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WPS Office = Menu Cut Paste Copy Format Painter Page: 2/5 Words: 731 A Investment Man...ework 1[2418]Q • + Home Insert Times New Roman 12 ▾ BIU A X² X₂ A & A - A ==== BARS.C Spell Check Type here to search Section Tools Q Click to find commands Page Layout References Review View A A Aa=•=•==XA9 1. m LLJ AaBbCcDd AaBb AaBBC AaBbC Normal Heading 1 Heading 2 Heading 3 = 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. e 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: $10.0 million cash (from sale of the private company interest, net of a $10 million that he planned to give to charity) $10.0 million stocks and bonds ($5 million each) $ 5.0 million in investment property (now fully leased) $ 10.0 million value of his residence $35.0 million in total available assets Required: 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. 四阁 8: 42 V Compatibility Mode Sign in 1 Word Typesetting 100% Go Premium & - 13- T Find and Select™ Replace 27°C A@O4) ENG Settings 9:31 pm 24/5/2022 ↑ 0 7 + x > S DR ŝt Ⓒ 00 00 KA 35
Transcribed Image Text:WPS Office = Menu Cut Paste Copy Format Painter Page: 2/5 Words: 731 A Investment Man...ework 1[2418]Q • + Home Insert Times New Roman 12 ▾ BIU A X² X₂ A & A - A ==== BARS.C Spell Check Type here to search Section Tools Q Click to find commands Page Layout References Review View A A Aa=•=•==XA9 1. m LLJ AaBbCcDd AaBb AaBBC AaBbC Normal Heading 1 Heading 2 Heading 3 = 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. e 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: $10.0 million cash (from sale of the private company interest, net of a $10 million that he planned to give to charity) $10.0 million stocks and bonds ($5 million each) $ 5.0 million in investment property (now fully leased) $ 10.0 million value of his residence $35.0 million in total available assets Required: 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. 四阁 8: 42 V Compatibility Mode Sign in 1 Word Typesetting 100% Go Premium & - 13- T Find and Select™ Replace 27°C A@O4) ENG Settings 9:31 pm 24/5/2022 ↑ 0 7 + x > S DR ŝt Ⓒ 00 00 KA 35
WPS Office = Menu Cut Paste Copy Format Painter Page: 2/5 Words: 766 Spell Check A Type here to search Investment Man...ework 1[2418]Q • Section Tools Q Click to find commands m Times New Roman 12 Home Insert Page Layout References Review View A A Aa=•=•==XA9 BIU A X² X₂ A & A - A ==== E· з B- ≡ ▾ LLJ AaBbCcDd AaBbCcDd AaBbCcDd AaBbCcDd Header fontstyle01 fontstyle21 fontstyle31 = 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: $10.0 million cash (from sale of the private company interest, net of a $10 million that he planned to give to charity) $10.0 million stocks and bonds ($5 million each) $5.0 million in investment property (now fully leased) $ 10.0 million value of his residence $35.0 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 Compatibility Mode B EU E 142 G + BARS.C 0 2 V Sign in 1 Word Typesetting 100% Go Premium & - 13- T Find and Select™ Replace 27°C A@O4) ENG Settings 9:27 pm 24/5/2022 ↑ 0 7 + x > S DR ŝt Ⓒ 00 00 KA (34)
Transcribed Image Text:WPS Office = Menu Cut Paste Copy Format Painter Page: 2/5 Words: 766 Spell Check A Type here to search Investment Man...ework 1[2418]Q • Section Tools Q Click to find commands m Times New Roman 12 Home Insert Page Layout References Review View A A Aa=•=•==XA9 BIU A X² X₂ A & A - A ==== E· з B- ≡ ▾ LLJ AaBbCcDd AaBbCcDd AaBbCcDd AaBbCcDd Header fontstyle01 fontstyle21 fontstyle31 = 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: $10.0 million cash (from sale of the private company interest, net of a $10 million that he planned to give to charity) $10.0 million stocks and bonds ($5 million each) $5.0 million in investment property (now fully leased) $ 10.0 million value of his residence $35.0 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 Compatibility Mode B EU E 142 G + BARS.C 0 2 V Sign in 1 Word Typesetting 100% Go Premium & - 13- T Find and Select™ Replace 27°C A@O4) ENG Settings 9:27 pm 24/5/2022 ↑ 0 7 + x > S DR ŝt Ⓒ 00 00 KA (34)
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