Reference no: EM13896286

Part 1 Tasks

In general terms, discuss how the following should be taken into consideration when constructing an investment portfolio:

· Age

· Income

· Debt level and assets

· Marital status

· Parental status

· Risk tolerance

· Time horizon

· General economic conditions

Part 2 Tasks

Task 1

Discuss the efficient market hypotheses, and answer the following question:

· Does this hypothesis support active trading or buying a passive stock index fund?

Task 2

· Discuss several pieces of legislation that were enacted to protect against unethical investing practices.

Task 3

To illustrate your knowledge of portfolio construction, design a portfolio based on the following scenario:

· Robert and Susan Jenkins have inherited $200,000. They are aggressive investors with a joint annual income of $100,000, no debt, and an additional $500,000 in assets other than the $200,000 inheritance.

Design 2 separate $200,000 portfolios based on the following scenarios:

· The couple has 3 children between the ages of 9 and 17 years old, and they will use this money to pay for their college education.

· The couple will use the money to help fund retirement in 35 years.

When designing your portfolios, be sure to keep the following in mind:

· Each portfolio should contain at least 3 common stocks, 1 American Depositary Receipt (ADR) that you researched, and 3 bonds.

· Leaving a portion of the portfolio in cash is an option if you feel that is it appropriate.

· Charts and graphs should be used where appropriate.

· Portfolio models should be based on the Jenkins' demographic profile and time horizon.

Be sure to include the following in your discussion:

· Reasons for your investment choices

· Stock and bond investment risk and return factors

· The security market line

· Beta and standard deviation

· Bond duration and interest rates