Good day, can I have this assignment by Friday February 18,2022. Thanks in Advance.
Overview
As an investor for yourself or your clients, you have the job of developing investment objectives and a plan to achieve those objectives and then make
subsequent investments in appropriate assets accordingly. This process can be collectively termed “the investment process.” It is helpful to break the process
down into the four core concepts that underpin any sound investment process.
First, you must understand what you are investing in. You have to know the underlying characteristics of the investment. What type of asset is it? What type of
security? How is it priced? What are the expected cash flows? Who are the typical investors and what are their typical motives? If you do not understand the
answers to those questions, then the initial expectations you develop about the value and risk of the asset will be fundamentally flawed. This sets you up for
missteps that can lead to underperforming your investment objectives.
Second, you must be able to estimate the value of the asset. Valuation is about assessing the estimated cash flows of the asset. This is a key component of
discerning absolute return potential and the differences between competing assets. It has a significant influence on the third step in the process as well.
The third step is developing a thesis about an asset’s expected return and the associated risk. This is accomplished by assessing your valuation estimates against
the current market price and any developing economic or market dynamics that may impact your expected valuation or its pricing. The market is constantly
changing, and these expectations need to be monitored on a regular basis to ensure they continue to correspond to the objectives you are trying to achieve.
Finally, you must understand how the assets in a portfolio interact with one another. It is likely that you will not have just one investment, so any additional
assets will impact the overall performance of the portfolio. You want to formulate a plan to add assets that, when combined together, will have the potential to
meet your objectives. Putting all of these steps together into a consistent, thorough process will position you to better meet the investment objectives laid out
at the beginning.
The project is divided into two milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final
submissions. These milestones will be submitted in Modules Three and Five. The final product will be submitted in Module Seven.
In this assignment, you will demonstrate your mastery of the following course outcomes:
Differentiate between investment vehicles, asset classes, and security types for effectively selecting investment exposures
Apply appropriate models in determining the estimated value of stocks and bonds relative to current market prices for informing investment decisions
Apply portfolio measures in constructing comprehensive investment portfolios that appropriately address client risk and return objectives
Assess the risks associated with investments for their implications on expected returns
Prompt
For this assignment, you will assume the role of a financial advisor responsible for developing an investment portfolio for a client. In developing the portfolio,
you will interpret client financial information and craft a sound and informed portfolio that is personalized to the unique needs of your client. You will also select
five stocks from a provided list and produce valuations by selecting the most appropriate valuation model. These valuations may also be used within the
portfolio you are developing for your client.
Specifically, the following critical elements must be addressed:
I. Client Analysis: In this section, you will analyze your clients’ financial documentation and determine their risk tolerance and objectives. To effectively
address the critical elements in this section, you must analyze the information for both client one and client two.
A. Analyze each client’s financial documentation in order to perform the following evaluative activities. Be sure to support your analysis with
relevant client information.
1. Explain the clients’ risk tolerances.
2. Explain the clients’ return objectives.
3. Explain the clients’ liquidity objectives.
B. Using the three objectives above, write a brief investment statement classifying the clients into one of the following categories: growth, income,
or capital preservation. Justify your response with specific client information.
II. Stock Analysis: In this section, you will select five stocks from the provided list and determine their values by applying an appropriate valuation model
from the following options: price to multiple model (earning or sales), dividend valuation model, or free cash flow to equity valuation model.
A. Determine the value of each stock by using an appropriate model based on the characteristics provided for each stock; use each model at least
once.
B. Provide a rationale for the stock valuation method you chose for each stock. Cite specific information to support your decisions.
C. Using the calculated valuation, the current market price, and historical performance, determine the expected return for each stock.
III. Portfolio Development: In this section, you will develop a portfolio for a client (Ezra or Jacob and Rachel) based on the client’s risk tolerance, return
objectives, and liquidity objectives. You will select appropriate assets from the provided list.
A. For the client, develop a portfolio from the list of assets provided that is informed by your analysis of the client’s objectives and (if applicable)
the stock valuation you determined.
B. Calculate the expected portfolio return using the CAPM (beta) model. Based on the risk tolerance and return objective of the client you didn’t
choose for this assignment, would you design an investment portfolio that has a higher or lower expected portfolio return, and why?
C. Calculate the expected portfolio standard deviation. Based on the risk tolerance and return objective of the client that you didn’t choose for this
assignment, would you design an investment portfolio that has a higher or lower expected standard deviation, and why?
IV. Portfolio Performances
A. Provide a rationale to present to the client for the portfolio you have developed. In your rationale, include specific examples to support your
recommendations, and be sure to address the following:
1. Explain how your recommendations align with the client’s risk tolerance.
2. Explain how your recommendations align with the client’s return objectives.
B. Using the provided ex-post portfolio return statistics, evaluate the portfolio’s performance and compare it to its appropriate benchmark. In your
evaluation, be sure to address the following:
1. Calculate portfolio return.
2. Calculate the Sharpe ratio for the portfolio and benchmark.
3. Calculate the Treynor’s measure for the portfolio only.
4. Calculate Jensen’s measure for the period for the portfolio only.
Milestones
Milestone One: Client Analysis
In Module Three, you will create a draft of the client analysis portion of the final project. This milestone is graded with the Milestone One Rubric.
Milestone Two: Stock Analysis and Portfolio Development
In Module Five, you will submit a draft of the stock analysis and portfolio development portions of the final project. This milestone is graded with the Milestone
Two Rubric.
Final Submission: Portfolio and Rationale
In Module Seven, you will submit your portfolio and rationale. It should be a complete, polished artifact containing all of the critical elements of the final
product. It should reflect the incorporation of feedback gained throughout the course. This milestone will be graded using the Final Project Rubric.
Final Project Rubric
Guidelines for Submission: Your submission should be 5–7 pages, double spaced, with 12-point Times New Roman font, one-inch margins, and APA formatting.
Work must be shown for all calculations. You may use and upload an Excel workbook to show your calculations. In your written paper, if you are referring to data
that is found within an uploaded Excel workbook, be sure to include a citation—for example, “the portfolio’s expected return is 7.2% (E64, Sheet1, WB1),” where
E64 is the cell that the calculation took place in, Sheet1 is the tab, and WB1 is designating the name of your file. This ensures that your instructor can quickly and
accurately check data entry, formula use, and financial calculations.
Critical Elements Exemplary Proficient Needs Improvement Not Evident Value
Client Analysis:
Client Information:
Risk Tolerances
Meets “Proficient” criteria, and
response demonstrates a
nuanced understanding of client
risk tolerance causes (100%)
Explains the clients’ risk
tolerances, supporting the
explanation with relevant client
information (85%)
Explains the clients’ risk
tolerances, supporting with client
information, but explanation is
missing components, or
supporting information is missing
or contains inaccuracies (55%)
Does not explain the clients’ risk
tolerances (0%)
6
Client Analysis:
Client Information:
Return Objectives
Meets “Proficient” criteria, and
response demonstrates an
advanced ability to extract a
thorough and accurate summary
of client return objectives
(100%)
Explains the clients’ return
objectives, supporting the
explanation with relevant client
information (85%)
Explains the clients’ return
objectives, supporting with client
information, but explanation is
missing components, or
supporting information is missing
or contains inaccuracies (55%)
Does not explain the clients’ return
objectives (0%)
4.
8
Client Analysis:
Client Information:
Liquidity Objectives
Meets “Proficient” criteria, and
response demonstrates an
advanced ability to extract a
thorough and accurate summary
of client liquidity objectives
(100%)
Explains the clients’ liquidity
objectives, supporting the
explanation with relevant client
information (85%)
Explains the clients’ liquidity
objectives, supporting with client
information, but explanation is
missing components, or
supporting information is missing
or contains inaccuracies (55%)
Does not explain the clients’
liquidity objectives (0%)
4.
8
Client Analysis:
Brief Investment
Statement
Meets “Proficient” criteria, and
response comprehensively
portrays each client’s
investment objectives (100%)
Writes a brief investment
statement based on client
analysis and classifies clients into
a category, justifying response
with specific client information
(85%)
Writes a brief investment
statement based on client analysis
and classifies clients into a
category, justifying response with
specific client information, but
response is missing components,
or supporting information is
missing or contains inaccuracies
(55%)
Does not write a brief investment
statement (0%)
4.8
Stock Analysis:
Determine the Value
Accurately determines the value
of each stock using an
appropriate model based on the
characteristics provided for each
stock (100%)
Determines the value of each
stock, but determination contains
inaccuracies, or model applied is
not appropriate (55%)
Does not determine the value of
each stock (0%)
8
Stock Analysis:
Stock Valuation Method
Meets “Proficient” criteria, and
response demonstrates keen
insight into the appropriate
application of stock valuation
methods (100%)
Provides a rationale for the stock
valuation method chosen for
each stock, citing specific
information to support decisions
(85%)
Provides a rationale for the stock
valuation method chosen for each
stock, but rationale is missing
components or misaligned, or
information cited is not relevant
or nonexistent (55%)
Does not provide a rationale for the
stock valuation method chosen for
each stock (0%)
6
Stock Analysis:
Expected Return
Accurately determines the
expected return for each stock
based on the calculated
valuation, current market price,
and historical performance
(100%)
Determines the expected return
for each stock based on the
calculated valuation, current
market price, and historical
performance, but determination
is missing components or contains
inaccuracies (55%)
Does not determine the expected
return of each stock (0%)
6
Portfolio Development:
Develop a Portfolio
Meets “Proficient” criteria, and
response demonstrates keen
insight into the integration of
client objectives to develop a
diverse and comprehensive
portfolio (100%)
Develops portfolio from the lists
of assets provided that are
informed by an analysis of the
client’s objectives (85%)
Develops portfolio from the lists
of assets provided that are
informed by an analysis of client’s
objectives, but portfolio is missing
components or is illogical (55%)
Does not develop a portfolio for the
client (0%)
6
Portfolio Development:
Expected Portfolio
Return
Accurately calculates the
expected portfolio return for a
portfolio using the CAPM model
and accurately discusses the
other client (100%)
Calculates the expected portfolio
return using the CAPM model, but
calculation contains inaccuracies
or the other client is not
accurately discussed (55%)
Does not calculate the expected
portfolio return using the CAPM
model or does not discuss the other
client (0%)
8
Portfolio Development:
Expected
Standard Deviation
Accurately calculates the
expected portfolio standard
deviation for the portfolio and
accurately discusses other client
(100%)
Calculates the expected portfolio
standard deviation, but
calculation contains inaccuracies
or other client is not accurately
discussed (55%)
Does not calculate the expected
portfolio standard deviation or does
not discuss other client (0%)
8
Portfolio Performances:
Rationale:
Risk Tolerance
Meets “Proficient” criteria, and
response makes cogent
connections between portfolio
recommendations and the
client’s risk tolerance (100%)
Explains how the
recommendations align with the
client’s risk tolerance, including
specific examples (85%)
Explains how the
recommendations align with the
client’s risk tolerances, but
explanation is misaligned or
missing components or specific
examples (55%)
Does not explain how the
recommendations align with the
client’s risk tolerance (0%)
6
Portfolio Performances:
Rationale:
Return Objectives
Meets “Proficient” criteria, and
response makes cogent
connections between portfolio
recommendations and the
client’s return objectives (100%)
Explains how the
recommendations align with the
client’s return objectives,
including specific examples
(85%)
Explains how the
recommendations align with the
client’s return objectives, but
explanation is misaligned or
missing components or specific
examples (55%)
Does not explain how the
recommendations align with the
client’s return objectives (0%)
6
Portfolio Performances:
Portfolio’s
Performance:
Portfolio Return
Accurately calculates the
portfolio return (100%)
Calculates the portfolio return,
but calculations are missing
components or contain
inaccuracies (55%)
Does not calculate the portfolio
return (0%)
6
Portfolio Performances:
Portfolio’s
Performance:
Sharpe Ratio
Accurately calculates the Sharpe
ratio for the portfolio and
benchmark (100%)
Calculates the Sharpe ratio, but
calculation is missing components
or contains inaccuracies (55%)
Does not calculate the Sharpe ratio
(0%)
6
Portfolio Performances:
Portfolio Performance:
Treynor’s Measure
Accurately calculates Treynor’s
measure for the portfolio
(100%)
Calculates Treynor’s measure but
calculations contain inaccuracies
(55%)
Does not calculate Treynor’s
measure (0%)
4.8
Portfolio Performances:
Portfolio’s
Performance:
Jensen’s Measure
Accurately calculates Jensen’s
measure for the portfolio
(100%)
Calculates Jensen’s measure, but
calculations contain inaccuracies
(55%)
Does not calculate Jensen’s
measure (0%)
4.8
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented in
a professional and easy-to-read
format (100%)
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
(85%)
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact readability
and articulation of main ideas
(55%)
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization that
prevent understanding of ideas
(0%)
4
Total 100%
