Scenario:
A young couple need your help to build their retirement fund. They recently received a tax free lump sum for $100,000 as their wedding gift. They are about 30 years each and have enough discretionary income no to worry about the market fluctuations in short term. Their current combined annual salaries is about $250,000. They want you to construct an investment portfolio for their retirement.
Requirements:
1- How do you classify the couple's risk tolerance and why (Show with risk tolerance metrics)
2- Using Modern Portfolio Theory (MPT), identify a proper asset allocation for the couple assets (Using minimum 5 different assets and Showing which method was used and why)
3- Using Fundamental Analysis (based on DDM, DCF, Residual Income Model (RIM), and Market Multiples) and Technical Analysis (chart patterns along with at least two technical indicator, but no more than four technical indicators), decide which asset would you invest? What price would purchase the assets?
4- Analyze and calculate the following metrics for your subject portfolio:
- Annualized Return (APY)
- Standard Deviation
- Beta
- Sharpe Ratio
- Alpha or Jensen Ratio
- Treynor Ratio