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


CASE PROBLEM INVESTMENT STRATEGY J. D Williams, Inc. is an investment advisory firm that manages more than $120 millions in funds for its numerous clients. The company uses an assets allocation model that recommends the portion of each client's portfolio to be invested in a growth stock funds, 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 clients 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 maximum 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 money market fund at 0.01. An overall portfolio risk index is computed as a weight 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 allocated the $800,000 among the growth, income, and money market fund? Develop a linear programming model that will provide the maximum yield for the portfolio. Use your model to develop a Managerial Report. Managerial Report 1. Recommend how much of $800,000 should be invested in each of the three funds. What is the annual yield you anticipate for the investment recommendation? 2. Assume that the client's risk index could be increased to 0.055. How much would the yield increase, and how would the investment recommendation change? 3. Refer again to the original situation where the client's risk index was assessed to be 0.05. How would your investment recommendation change if the annual yield for the growth fund were revised downward to 16 percent or even to 14 percent? 4. Assumed that the client expressed some concern about having too much money in the growth fund. How would the original recommendation change if the amount invested in the growth fund is not allowed to exceed the amount invested in the income fund? 5. The asset allocation model you developed may be useful in modifying the portfolios for all of the firm's clients whenever the anticipated yields for the three funds are periodically revised. What is your recommendation as to whether use of this model is possible? NB. USE THE ADDITIONAL BELOW INFORMATION FROM ESSENTIALS OF BUSINESS ANALYTICS ON PAGE 587 OF THE TEXT BOOK you will work on the Investment Strategy Case problem on page 587 of your text. Keep in mind the structure of your written report as it is critical. All reports begin with an introduction to the case. In it you outline briefly what the company does, how it developed historically, what problems it is experiencing, and how you are going to approach the issues addressing the questions at the end of the case. Do this sequentially by writing, for example, "First, we discuss the environment of Company X...Third, we discuss Company X's business-level strategy... Last, we provide recommendations for turning around Company X's business.” Make sure you use plenty of headings and subheadings to structure your analysis. For example, have separate sections on any important conceptual tool you use. Thus, you might have a section on Porter's five forces model as part of your analysis of the environment. You might offer a separate section on portfolio techniques when analyzing a company's corporate strategy. Tailor the sections and subsections to the specific issues of importance in the case. In the third part of the case write-up, present your solutions and recommendations. Be comprehensive, and make sure they are in line with the previous analysis so that the recommendations fit together and move logically from one to the next. The recommendations section is very revealing because it shows how much work you put into the case from the quality of your recommendations. Your paper is to be written in 6th edition APA formatting, and should be no less than 5 pages in length (excluding cover and reference page). Also, you should use at least 2 academic references to support your analysis and critical thinking. Guidelines to help in writing a successful case study


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
-0.700MMF-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)



MMF(Money Market Fund)



GF(Growth Fund)



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$
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:
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...
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