Case study: J. D. Williams, Inc. is an investment advisory firm that manages more than $120 million in funds for its numerous clients. The company uses an asset allocation model that recommends the portion of each client’s portfolio to be invested in a growth stock fund, an income fund, and a money market fund. To maintain diversity in each client’s portfolio, the firm places limits on the percentage of each portfolio that may be invested in each of the three funds. General guidelines indicate that the amount invested in the growth fund must be between 20% and 40% of the total portfolio value. Similar percentages for the other two funds stipulate that between 20% and 50% of the total portfolio value must be in the income fund and that at least 30% of the total portfolio value must be in the money market fund. In addition, the company attempts to assess the risk tolerance of each client and adjust the portfolio to meet the needs of the individual investor. For example, Williams just contracted with a new client who has $800,000 to invest. Based on an evaluation of the client’s risk tolerance, Williams assigned a maximum risk index of 0.05 for the client. The firm’s risk indicators show the risk of the growth fund at 0.10, the income fund at 0.07, and the money market fund at 0.01. An overall portfolio risk index is computed as a weighted average of the risk rating for the three funds, where the weights are the fraction of the client’s portfolio invested in each of the funds. Additionally, Williams is currently forecasting annual yields of 18% for the growth fund, 12.5% for the income fund, and 7.5% for the money market fund. Questions 1. Identify one key problem in the case study. While there may be several problems and a multitude of symptoms, attempt to identify one problem, the resolution of which would alleviate most of the symptoms found in the case. The problem can frequently be defined around one of the key factors of marketing, target market, environment, or marketing mix elements (product, price, promotion, or distribution). 2.Develop two or more alternative solutions to the defined problem. Alternative actions that could correct the problem at hand. Identify the pros and cons of implementing each alternative. 3. Select one of the alternatives and explain why it would be best. Most of this work is already done if the alternative solutions clearly point out advantages and disadvantages to each. 4. Implementation/Recommendations: Identify how to implement the selected solution and what the expected results (positive and negative) might be. identify an action.
Case study:
J. D. Williams, Inc. is an investment advisory firm that manages more than $120 million in funds for its numerous clients. The company uses an asset allocation model that recommends the portion of each client’s portfolio to be invested in a growth stock fund, an income fund, and a
In addition, the company attempts to assess the risk tolerance of each client and adjust the portfolio to meet the needs of the individual investor. For example, Williams just contracted with a new client who has $800,000 to invest. Based on an evaluation of the client’s risk tolerance, Williams assigned a maximum risk index of 0.05 for the client. The firm’s risk indicators show the risk of the growth fund at 0.10, the income fund at 0.07, and the money market fund at 0.01. An overall portfolio risk index is computed as a weighted average of the risk rating for the three funds, where the weights are the fraction of the client’s portfolio invested in each of the funds.
Additionally, Williams is currently forecasting annual yields of 18% for the growth fund, 12.5% for the income fund, and 7.5% for the money market fund.
Questions
1. Identify one key problem in the case study. While there may be several problems and a multitude of symptoms, attempt to identify one problem, the resolution of which would alleviate most of the symptoms found in the case. The problem can frequently be defined around one of the key factors of marketing, target
2.Develop two or more alternative solutions to the defined problem. Alternative actions that could correct the problem at hand. Identify the pros and cons of implementing each alternative.
3. Select one of the alternatives and explain why it would be best. Most of this work is already done if the alternative solutions clearly point out advantages and disadvantages to each.
4. Implementation/Recommendations: Identify how to implement the selected solution and what the expected results (positive and negative) might be. identify an action.
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In a paragraph form explain and Implementation/Recommendations: Identify how to implement the selected solution and what the expected results (positive and negative) might be identify an action.
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