Not register? Register Now!
Essay Available:
You are here:
Pages:
4 pages/≈1100 words
Sources:
2 Sources
Level:
APA
Subject:
Type:
Case Study
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
\$ 17.28
Topic:

Marketing Case Study About Problem Investment Strategy (Case Study Sample)

Instructions:

source..
Content:

J.D Williams, Inc. Case Problem Investment Strategy
Institution Affiliation:
Student’s Name:
J.D Williams, Inc.; Case Problem Investment Strategy
The Case Summary
J.D. Williams Inc. is a business entity that provides advisory services to a large number of customers on ways of investing their funds. The company manages over one hundred and twenty million dollars (\$120,000,000) and makes appropriate recommendations to their customers on the amount of money to invest in the available three investment capital options; money market, growth stock and income. The firm keeps the diversity of each customer's portfolio, in each of the possible three fund investment options, limits are set on the rate (percentage) potential portfolio for investment. The growth money investment amount should be 20% to 40% of the total value of the portfolio, 20% to 50% for the income investment fund and a minimum of 30% for the money market investment fund. Therefore, to meet the needs of the investors, the company must make efforts to evaluate and evaluate each customer’s the risk index tolerance and appropriately adjust their portfolios accordingly.
The problem investment case is set by one client with an asset value of eight hundred thousand dollars (\$800,000). After conducting the risk tolerance assessment for the customer a maximum of 0.05 risk index was set. The company's risk evaluation indicators indicated a risk rate of 0.01 in the fund for the capital market, 0.07 income and 0.10 in growth. The J.D Williams Inc. predicted the annual revenue for money market, income and growth respectively to be: 7.5%, 12.5%, and 18.0%.
The L.P Formulation Model for the Optimal Yield
The firm is required to establish a model in which the yield from the client's investment portfolio is augmented provided with the limitations
The Maximum risk rate: 0.050
The Decision Variables: IF (Income Fund), GF (Growth Fund), MMF (Money Market Fund)
The Objective company function: To appropriately maximize the total revenue generation for the investment portfolio:
Maximum Z=0.075MMF+0.18GF +0.125IF
Subjecting it to the constraint
1MMF+1GF+1IF <=\$800,000
-0.200MMF+0.800GF-0.200IF >=0
-0.400MF+0.600GF-0.400IF <=0
-0.200MMF-0.200GF+0.800IF <=0
-0.500MMF-0.500GF+0.500IF<=0
-0.700MMF-0.300GF-0.300IF <=0
0.040MMF+0.050GF+0.020IF <=0
The current J.D Williams, Inc. table give the information that outlines the important assumptions that must be considered in building up the growth of the client's investment strategy
The Investment Portfolio

Risk Indictor index

Predicted yearly Yields

IF (Income Fund)

0.070

0.1250

MMF(Money Market Fund)

0.010

0.0750

GF(Growth Fund)

0.100

0.180

The excel production
The original inquiry for the J.D Williams, Inc.'s problem investment strategy case manages and takes into account the outlined issues. The second inquiries for the investment issues request the proposals when the risk tolerance index is expanded by 0.0050.The third inquiry is whether the company should determine if there will make any required adjustment in the past investment arrangements if the revenue output for the growth and development assets decreases by two percent at the start and after that further two percent. The fourth question inquires to what extent the company will feel this merit allotment model is essential. The last inquiry seeks the management of the imperative in which the development and growth reserves cannot exceed the wage store reserve (Camm, 2015).
1. Recommending the amount \$800,000 the client should invest in growth fund, income fund and money market fund. What is the yearly yield you expect for recommendable investment?
MMF (Money Market Fund) = 392,889.00\$
GF (Growth Funds) =\$160,000.00
IF (Income Funds) = 247,111.00\$
Total Amount =800,000.00\$
The expected yearly returns (yield):
GF (Growth Stock Funds) =0.18x 247,111\$=44,800\$
MMF (Money Market Fund) =0.075 x392, 889=29,467\$
IF (Income Fund) =0.125 x 160,000\$=20,000\$
Total Amount=93,947.00\$
The total forecasted yearly Returns:
= 93,947.00\$ ÷800,000.00\$=11.74%
2. Yield Expansion and Recommendable Investment Change
MMF (Money Market Fund=346,667\$
IF (Income fund) =160,000\$
GF (Growth Stock Fund) =293,333\$
Total=800,000\$
The organizations expected yearly Yield:
IF (Income Fund) =0.125 x 160,000\$=20,000\$
GF (Growth Fund) =0.18 x 293,333\$=52,800\$
MMF (Money Market Fund) =0.075 x 346,667\$=26,000\$
Total amount =98,800.00\$
The total Expected yearly Yield:
=98,800\$÷800,000=12.35%
Expanding the customer's risk tolerance index to 0.0550 changes the first subjected constraint in the described model above from 0.10GF + 0.01MMF+0.07IF ≤ 0.05 to 0.10GF + 0.01MMF +0.07IF ≤ 0.055.Therefore the customer now invests 293,333\$,346,667\$ and 160,000\$ in the growth fund, money market fund, and income fund respectively. The anticipated returns for this investment combinations is 12.35 percent. Therefore, increasing the customer's risk tolerance index allows for high-level investment in the development and growth fund, which has the high rate of returns as compared to money market fund and income fund (Camm, 2015). Hence, this increases the anticipated yield on the investments.
3. The investment recommendation for fourteen percent or sixteen percent
When the GF is decreased 16%
MMF (Money Market Fund) = 0.075 x 392,889\$= 29,467\$
IF (Income Fund) =0.125 x 160,000\$ =20,000\$
GF (Growth Fund) =0.16 x 247,111\$ =39,537\$
Total =89,004\$
When the GF is reduced to 14%
MMF (Money Market Fund) =0.075 x 392,889\$=29,467\$
IF (Income Fund) =0.12...
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now: