It is composed of five sections
Background to help you understand the customer and the assignment in general:
The assignment is about developing and evaluating various investment strategies to one person, let’s call him ‘the customer’. you are to work the assignment for the sake of convincing the customer to trust you and let you invest on his behalf so you help him generate the required money (after a certain time) to achieve his goal (plan/dream).
The customer is: Married with one son and one daughter, 38 years old, current employee. If we look at his personal balance sheet, we can see that his various assets and liabilities could be grouped into liquid assets of (10K $), hard assets of (8.5K $), investment assets of (8K $), short term liabilities of (9K $) and long term liabilities of (9K $). His core goal (plan/dream) is to have a (building of two apartments) in 10 years from now. such building might cost him (according to today’s price) around 250K $. Once he buys such building (after securing the money in 10 years), he will use it for renting business purpose to generate regular income (will support him in his future retirement). The customer is so excited about the goal (plan/dream), and has a character that is ready for investment, however he does not have any experience in this regard (this is why you should convince him to invest on his behalf).

The customer is medium in the willingness and acceptance to risk of investment. As his current job/employment (assume it will last for a very long time) generates him the enough income to live the daily life, pay the committed liabilities and he can also save a net monthly amount of 600 $. He is ready to use such monthly saved amount in addition to the already available liquid assets of (10K $) for the purpose of 10 years investment, so he can achieve his goal (plan/dream).

After you understand the above background, you need to start the assignment based on the below sections and numbered sub-questions. You need to answer each and every numbered sub-question (Tell the reference number of each sub-question for each answer to make sure you answered all)

Important Remark: Show the website link for every idea, method, formula or any content used from the internet.

Section A about Future values and Risk Assessment (of around 900 words):
1. Calculate the future money value that meets customer goal(plan/dream) and consider assumptions about inflation (price changes) or other costs such as education, living etc..
2. Consider alternative financial arrangements such as for example inheritance or borrowing money etc.. What are the strengths and weaknesses in one?
3. If there is a currency mismatch, what are the foreign currency requirements and assets? What is the risk of currency exchange? How can we overcome such risk and what are the costs?
4. Considering the above ‘Background’, perform a risk assessment of the customer (using for example risk tolerance of the customer in a questionnaire format) and explain how such exercise about the customer will affect your investment advice. Consider how susceptible your calculations are to different scenarios

Section B about Asset Allocation (of around 1200 words). Make sure you relate your work to your work/assumption in section A
1. Outline your recommended portfolio’s asset allocation. Tell us about the recommended percentage of cash, bonds and stock to hold. Tell us about your anticipation about the sort of risk and return. How are you going to make these assessments? Tell us about the level of risk that you suggest the customer take. Always provide support for what you advise
2. Consider the issue of liquidity. Tell us about the quantity of cash required at each moment. And explain to us about the risks involved in holding more illiquid assets. Are these risks justified?
3. This asset allocation should include a consideration of alternative assets and foreign securities. What does the inclusion of these alternatives do to risk and return?
4. You need to support your asset allocation decision with reference to a view of the economy and you may also highlight potential changes in future economic conditions that would warrant a change in asset allocation
5. Remark: Do not at this point move from asset allocation to securities selection. Please recommend that 30% of the fund be invested in equities, but you should leave the (specific equities that will be chosen) until later in this assignment

Section C about investment strategy and benchmarks (of around 1200 words)
1. Here you need to decide if the investment strategy is going to be more passive or more active in nature. Tell us why you made this choice? Also tell us about the costs and benefits of other alternative strategies? How does this is related to the risk that the customer is prepared to take?
2. Tell us how frequently are you going to assess the performance of the portfolio? What are the things that might make you consider changing the composition of the portfolio? What are the conditions or circumstances that will make you advise to take some further actions?
3. You have to choose benchmarks to analyse the relative performance of the assets and securities that you have chosen. Outline the characteristics of a useful benchmark. Explain why you have chosen these benchmarks over alternatives

Section D about Picking specific securities (of around 1200 words)
1. Select the specific securities (bonds, equities or other) that you are going to recommend the customer purchase with his funds
2. Is it possible to purchase specific bonds that mature at the time that funds are required? Explain to the customer what this does to the risk of the portfolio
3. Tell us about the criteria that you have used to select the securities. Of course it should be based on and include an assessment such as the P/E ratio, the shape of the yield curve, and current price of risk in the market
4. The securities selection should be consistent with the asset allocation decided in Section B. Note that any changes in the asset allocation that have been considered should lead to some change in the composition of the securities held. In case you have outlined some potential for changes in the asset allocation, you have to also recommend changes in specific securities that would accompany these adjustments
5. When you may want to look at funds, which funds will you choose? How will you make the selection? What are the costs that you will have to pay to invest in such funds? What are the costs and benefits of using the funds rather than your own judgment?

Section E is the final summary (of around 500 words)
1. In Summary, Finalize and present the final selection of the particular bonds and equities for the portfolio. Such conclusion should be consistent with all the previous sections work and should be strong enough to convince the customer to let you invest on his behalf