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
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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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.
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Cut
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A
Investment Man...ework 1[2418]Q • +
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BIU A X² X₂ A & A - A ====
BARS.C
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A A Aa=•=•==XA9
1.
m
LLJ
AaBbCcDd AaBb AaBBC AaBbC
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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. 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.
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![WPS Office
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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
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BIU A X² X₂ A & A - A ==== E· з B-
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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
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