Allocation of clients
Students whose student number ends with the numbers 0 and 1.
Client 1 is 28 years old. They are risk averse and are engaged to be married. They have a M.Sc. in computing. While at University they developed software and created a small start-up business. This business now pays them £75,000 per year. They have savings of £225,000. They have no student loans outstanding. They rent their accommodation.
Students whose student number ends with the numbers 2 and 3.
Client 2 is 35 years old. They are single. They are a risk lover. They have a B.Sc. in Engineering, are about to start their second job and will be paid £60,000 p.a. They have no student loans. They have just received an inheritance of £300,000 in cash. They have a mortgage with 30 years remaining and pay £2,000 on their mortgage each month. Their house has a current market value of £400,000. Their new job means that they will have to relocate to their country’s’ capital city as soon as it is possible.
Students whose student number ends with the numbers 4 and 5.
Client 3 is a 45 year old married couple. They are risk neutral. They have two children, one is 7 the other is 9. They met at university and both have a B.Sc. in banking. They both work in banking and have savings of £750,000. They have combined earnings of £208,000 p.a. They own their own home (there is no mortgage outstanding) and the current value of their house is £1,040,000. They are currently supporting one set of their parents as neither can work because one has a long term illness and is cared for by their spouse.
Students whose student number ends with the numbers 6 and 7.
Client 4 is 60 years old. They are risk averse. They are married and have one adult child and two grandchildren. They retired early and currently volunteer for a charity. During their career they worked in marketing. Last year they received an inheritance of £350,000 in cash. They own their own home (there is no mortgage outstanding) which is valued at £450,000. They receive a pension of £45,000 each year. They have savings of £100,000 currently invested in government bonds that will mature shortly. They want to buy a one bedroom flat in Spain that they can use for holidays and will cost approximately £70,000.
Students whose student number ends with the numbers 8 and 9.
Client 5 is 70 years old and in very good health, they are married. They are risk neutral and have two adult children and three grandchildren. They are a senior executive in a listed company and own £100,000 of the company’s shares. They earn £300,000 each year. They plan to retire this year. They own their own home (there is no mortgage outstanding) which is valued at £2,100,000. They have savings of £600,000 and a pension which will pay them £100,000 p.a. They want to give both of their children a lump sum to pay off the children’s mortgages and to pay the University fees for their grandchildren.
At the beginning of the module you were allocated fictional client(s). In the tutorials, over the course of the module, you will be asked to create an Investor Policy Statement and a portfolio of investment instruments for your client. Based upon the client you have been allocated, and in the context of the current economic environment and the Covid-19 pandemic, answer the following questions.
(a) Provide a 200 word summary of the Investor Policy Statement you have created for your client.
(b) Provide a table listing all of the investment instruments that you have chosen to include in the final portfolio for your client. Demonstrate that purchasing these investment instruments has not cost more than the total amount of money the client had available for investment.
(c) (i) Explain which equities you have chosen to include in your client(s) portfolio and explain why you have chosen to include these companies.
(ii) Detail each of the investment instruments, other than equities, that you have included in your clients portfolio. Explain why you have included them and how and why you think these investments are suitable for your client(s).
Hint: You will need to explain how the investments you have chosen meet the needs of the client outlined in the Investor Policy Statement and how Covid-19 has influenced your choices.
(iii) What is the beta of your portfolio? Provide your calculations.
(iv) Explain the limitations of the portfolio you have created.
(Total 100 marks)
Allocation of clients