Investor Characteristics and Investment Objectives and Constraints Assume the following hypothetical investor:
Jennifer Buffett is a 33-year-old recent MBA graduate. She has been working since she was 18 and has seen her annual salary grow from $20,000 to $90,000 gross, over the span of 15 years. She rents an apartment and does not own any real estate. Her monthly living expenses are $4,000, including her $200 per month car payment and $700 per month student loan payment. She has no other debt and has savings totaling $50,000. She plans to get married next year and start a family of two children. She works as a marketing manager in a medium-size cosmetics company in Texas.
In this week’s Discussion, you will assess Jennifer’s characteristics and propose a reasonable set of investment objectives and the constraints she might have.
To Prepare
• Review other resources you may access from the Internet.
• Consider the following:
How can the return requirements of an investor be derived on the basis of her/his life conditions and probable personality characteristics?
How can the risk tolerance of an investor be derived on the basis of her/his life conditions and probable personality characteristics?
What possible financial investments would be considered as acceptable once the risk-return tradeoff for an investor has been defined?
Post by Day 3 a 3- to 6-paragraph analysis of Jennifer�s probable investment objectives and constraints. Please make sure to include the following in your analysis:
• What is Jennifer’s expected risk tolerance? Please, clearly characterize her risk tolerance and justify your response.
• What is Jennifer’s expected return requirements? Please justify.
• What possible constraints might Jennifer have for her investment decision? Please justify your response.