Investment advisory firm, J.D. Williams, Inc. is an

Investment advisory firm

Assignment Help Operation Management

Reference no: EM131715413

J.D. Williams, Inc. is an investment advisory firm that manages more than $120 million in funds for its numerous clients. The company uses an asset allocation model that recommends the portion of each client's portfolio to be invested in a growth stock fund, an income fund, and a money market fund. To maintain diversity in each client's portfolio, the firm places limits on the percentage of each portfolio that may be invested in each of the three funds. General guidelines indicate that the amount invested in the growth fund must be between 20 and 40 percent of the total portfolio value. Similar percentages for the other two funds stipulate that between 20 and 50 percent of the total portfolio value must be in the income fund and that at least 30 percent of the total portfolio value must be in the money market fund.

In addition, the company attempts to assess the risk tolerance of each client and adjust the portfolio to meet the needs of the individual investor. For example, Williams just contracted with a new client who has $800,000 to invest. Based on an evaluation of the client's risk tolerance. Williams assigned a maximun risk index of 0.05 for the client. The firm's risk indicators show the risk of the growth fund at 0.10, the income fund at 0.07, and the morney market fund at 0.01. An overall portfolio risk index is computed as a weighted average of the risk rating for the three funds, where the weights are the fraction of the client's portfolio invested in each of the funds.

Additionally, Williams is currently forecasting annual yields of 18 percent for the growth fund, 12.5 percent for the income fund, and 7.5 percent for the money market fund. Based on the information provided, how should the new client be advised to allocate the $800,000 amont the growth, income, and money market funds? Develop a linear programing model that will provide the maximum yield for the portfolio. Use your model to develop a managerial report.

What is the focus of company above and how did it developed historically?

Reference no: EM131715413

Questions Cloud

Most significant major trends in project management : identify the two most significant major trends in project management. Why have you chosen these two trends?

Calculate the irr and use it to determine the deviation : Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged

Prepare the property and equipment portion of gusto balance : Fixed Asset Transactions and Reporting - Prepare the property and equipment portion of Gusto's balance sheet at December 31, 2013

Prepare an analysis of impacts of a complex environment : Prepare an analysis of the impacts of a complex and uncertain environment on the project planning process.

Investment advisory firm : J.D. Williams, Inc. is an investment advisory firm that manages more than $120 million in funds for its numerous clients.

Discuss direct materials and conversion costs : Summarize total costs to account for and compute the cost per equivalent unit for direct materials and conversion costs

Why do biotech-pharma companies fail : Why do biotech / pharma companies fail? Can an investor predict failure? How can they best prepare to avoid failure?

Engine assembly plant : Pegasus Motors Corp. has its engine assembly plant in Milwaukee and its motorcycle assembly plant in Pittsburgh. How often should Pegasus transport engines.

What profit or loss can be anticipated with a demand : Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation.

User Account

All Pages