Investment Management



Your company TCI Investments Inc. was approached by three different potential investors. As Junior Analysts at the company you have been assigned one of potential investors and is being asked to construct an Investment Portfolio for the client.


The following gives an overview of the potential investors.

Mr. Lyons He is a 45-year-old farmer who is looking to invest in order to ensure that he can retire comfortably. He wants to invest $100,000 of his savings and be able to reap benefits in the next 15-20 years.



Mrs. Dixon She is a 60-year-old retired judge who is looking to buffer her retirement pension plan. She wants to invest $500,000 from which she would like to get back returns immediately.


Ms. Andrews She is a 25-year-old who recently landed her first job after college. She wants to begin saving towards her retirement at age 60. She has only $1,000 to invest but plans to put $500 per month to that amount along the way.


The company has always maintained diversification in the management of their clients’ portfolios and has identified the following markets as prime investment opportunities.

Fundamental analysis of the countries’ probable economic conditions reveals the following:





China (Steel) Germany


  Singapore (Financial) Trinidad

Tobago (Oil)



  Probability ROI Probability   ROI Probability ROI Probability ROI
Boom .70 12% .35   15% .45 14% .50 16%
Recession .10 8% .05   7.5% .25 7% .15 6%
Normal .20 10% .60   10.5% .30 12.5% .35 13%


TCI Investments Inc have decided that they would use a combination of the following assets classes in any one of their portfolios:

 Stocks (Listed on any Stock Exchange);  Bonds (Companies or Government); and  Cash Equivalents.

The following information was retrieved from the four economies about the financial assets:



Economy   Expected (Ri) Standard Deviation (σi)
  Stocks Bonds Cash Equivalent Stocks Bonds Cash


China 19% 9% 3% .36 .15 .02
Germany 16% 8.5% 5% .25 .08 .01
Singapore 23% 8% 5.5% .50 .20 .04
Trinidad and Tobago 10% 7.5% 4% .15 .07 .005



1. Identify the company’s role as the investor’s portfolio management team;

2. Provide an overview of an Investor Lifecycle; clearly highlighting the phase to which your client belongs.

3. Construct a Policy Statement for the assigned client to include:

a. Investor Goals;

b. Investor Objectives;

c. Investor Constraints.

4. State the importance of globally investing and why diversification is important to a portfolio.

a. Correlation; and

b. Risk-Free Assets.

5. Identify and explain the possible risks the investor’s investment may be exposed (must discuss a minimum of four).

6. Identify at least two investment strategies that may apply to the investor.

7. Explain the importance of asset allocation to the investor.

8. Decide how you would allocate the investor’s available funds and give reasoning for the allocation decision.

9. Calculate the E(Ri) for each economy and discuss the results;

10. Calculate the following for the portfolio you have come up with for your investor: a. E(port);

b. σ2(port); and

c. σ(port);

11. Conclude with discussing how your company plans to execute the final stage of constructing a portfolio.


Students are required to use the following rubric as a guide to completing this assignment.


Content (50 Marks)      
A. Company’s Role 5    
B. Investor Lifecycle 5    
C. Policy Statement 10    
D. Global Investing 5    
E. Potential Risks 10    
F. Investment Strategies 5    
G. Asset Allocation Decision 10    
Calculations: (40 Marks)      
A. Expected Returns and Discussion per Country 20    
B. Portfolio Returns and Standard Deviation 20    
Conclusion 5    
APA references and intext citations 3    
Use of subject language 2    



This assessment is worth 20% of your total marks and must be done within the deadline specified. Failure to do so will result in an automatic grade of zero. Plagiarism, improper documentation and blatant careless incorrect grammar and spelling will be penalized by the loss of 2.5 marks of your grade in each case.