Reference no: EM132432805
Project Question
You are a team of portfolio managers on Investment Advisory Services INC. Your firm has been invited to meet with the trustees of the Midlands Museum Endowment Fund (MMEF). The MMEF is a privately endowed charitable institution that is dependent on the investment return of $25 billion endowment fund to balance the budget, The treasurer of the museum has recently completed a study that indicates a need for cash flows from the endowment fund of 3.0 billion in 2019, $3.2 billion in 2020 and $3.5 billion in 2021 in order to balance the budget. At the time, the entire endowment portfolio is invested in Treasury bills and money market funds because the trustees fear a financial crisis. The trustees do not anticipate any further capital contributions to the fund. The trustees are all successful businessmen, and they are been critical of the fund's previous investment advisers for not following a logical decision-making process, In fact, several previous managers have been dismissed because of the inability to communicate with the trustees and the preoccupation with the funds relative performance rather than the cash flow needs.
Investment advisory services INC has been contacted by the trustees because of it reputation for understanding and relating to its clients' needs. The trustees have specifically asked to meet with you because of your recent article in a professional journal outlining the decision-making process of your firm. In the letter of the invitation addressed to you, the trustees have included the flow chart of exhibit A (The portfolio management Process) and the following quotations from the speech by Professor William Sharpe that we included in the article
"It is important to understand that, even if the market were perfectly efficient with every security plotting right on the plane, the investment management process would still require sophisticated procedures. In particular, it would require the tailoring of portfolios to meet clients'attitude towards risk and clients' attitudes towards yield vis-a vis gains.
One important part of this exercise (modern portfolio theory) is finding what the client is all about - where one client differs from another"
Explain in detail how each of the following relates to the determination of either investor objectives or investor constraints that can be used to determine the portfolio policies for this three-year period for the MMEF also explain the processes in Exhibit A:
- Liquidity requirements
- Return requirements
- Risk tolerance
- Time Horizon
- Tax considerations
- Regulatory and legal considerations
- Unique needs and circumstances.
Exhibit A: The Portfolio Management process
- Identification and specification of: Investors objectives, Investors constraints
- Determination of portfolio policies
- Integration of portfolio policies and expectational factors: Asset allocation, Investment strategies, Execution
- Monitoring the portfolio and responding to change
- Portfolio performance
- Expectational factors regarding economic analysis, market analysis and individual security analysis
|
How long do you have to pay before the account is overdue
: How long do you have to pay before the account is overdue? If you take the full period, how much should you remit?
|
|
What societal changes might account for success of starbucks
: Using Porter's generic strategies, which strategy is Starbuck's pursuing? Who is the customer? What is the value provided to the customer?
|
|
Discuss why a stronger dollar could enlarge
: Discuss why a stronger dollar could enlarge the U.S. balance of trade deficit. Explain why a weaker dollar could affect the U.S. balance of trade deficit.
|
|
Record a single compound journal entry
: Record a single compound journal entry. Record debits first, then credits. Select the explanation on the last line of the journal entry table
|
|
Determination of portfolio policies
: Identification and specification of: Investors objectives, Investors constraints Determination of portfolio policies
|
|
How much after-tax cash will the liquidation generate
: If Lenny's marginal tax rate is 35% and his tax rate on capital gains is 20%, how much after-tax cash will the liquidation generate
|
|
Write an article on Rethinking Marketing
: Discuss the articles on the Rethinking Marketing, Branding in the Digital Age, Marketing Myopia, Marketing Malpractice,The Brand Report Card
|
|
Identify the sources where you read about the trend
: Identify the source(s) where you read about the trend of the 1920s. The Great Depression (1929-1939) was one of the most devastating economic downturns.
|
|
What is the payback period
: What is the payback period? If the interest rate is 6 percent, what is the project NPV? Should the project be accepted?
|