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FINA 4315; Security Analysis and Portfolio Management

Security Analysis and Portfolio Management (FINA 4315)

Spring 2015-16

Case (30 Points)

You will write a policy statement for Mr. Shillingford, your new client. He is a 40 year old mid-level manager at a reputed retail company named SmallLots, Inc.  He married six years ago and has a three year old child. He expects to have another child in about few months. His salary is $125,000 per year. He expects to retire at the age of 62.  His current bank balance is $200,000. Mr. Shillinford’s wife is just a housewife.

Mr. Shillingford is thinking about investing in such a way so that he is able to have enough to retire comfortably. He and his family members have good health as well as life insurance. He bought a house 12 years ago. He has been paying a monthly installment of $1,500 per month for his house. He has five more years to pay for his outstanding loan of the house. His other monthly expenses are approximately $3,000 per month.

He has a passion for travelling and hunting.  Mr. Shillingford wants to send his children to top class business school, which now costs about $70,000 per year. He also has a plan to give a gift of $200,000 (after retirement) to his undergraduate institutions where he studied 17 years ago.

Assume that Mr. Shillingford has average risk tolerance. You may also assume if you think any important information is missing above. In that case, please write those assumptions at the beginning of the policy statement.

Based on the available information, write a nice policy statement for your client. You must mention how you should advise to invest across various asset classes and reasons. Look at the slides to know the contents of a policy statement. Your policy statement should not be more than 4/5 pages (with 12 font and 1.5 spacing). Any extra calculation can be put in the appendix.



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