Theory of Investments

ISC Sussex Assignment Brief for Theory of Investments Mid-Semester Report – IY1 – Report Background: Many prospective investors face the problem of choosing what financial assets they should invest their money in, and in what proportions so as to achieve the best possible outcomes. Mrs. Lisa Crathern of Redhill, United Kingdom, inherited a fortune from her billionaire father – a business tycoon who died recently. She has been considering investing a sizeable proportion of her inheritance in financial assets. Her son, Tom, who is a second year finance undergraduate at Sussex University, Falmer, advised her to seek the services of Efficient Portfolio Agency Limited (EPA Ltd.), a professional investment services firm based in Brighton. Tom explained to Lisa that the firm would perform relevant analysis to determine and advise her about the optimal complete portfolio in which to invest her funds. He took Lisa to the offices of EPA Ltd. to consult with the senior partners. After an initial assessment of Mrs. Crathern’s level of risk aversion and return expectations, the firm told her that a certain percentage of her funds would be determined and invested in a risk-free asset, and the remaining in an optimal portfolio of two (2) risky assets. You are a consultant at EPA Ltd, and the senior partner of the firm – Mrs. Sarah Padbury, has asked you to prepare a document for Mrs. Crathern. REQUIRED: Write a report to Mrs. Crathern that explains in much detail the analysis that need to be carried out to determine the optimal complete portfolio for her. The report should describe the procedure that the firm would follow to determine the optimal complete portfolio, and explain the relevance of the analysis to be carried out at different stages. Your work may include tables and graphical illustrations, where necessary. Your report to Mrs. Crathern should be submitted under a covering note, comprising NOT more than 3 sentences and NOT more than 50 words. The limit for this report is 1,000 words, plus or minus 10%. In-text graphical illustrations, calculations and any tables/schedules would not count towards the word limit. The completed work should be sent to the course drop box on study direct by 23:00 hours on Friday 11 March 2016. Report structure: Your assignment should follow a normal report structure/format consisting of: a) introduction b) main part c) conclusion d) appendices The main part should identify, discuss and explain the significance of various analysis that need to be carried out. There should be in-text referencing to support and evidence your reading. You are to use the Harvard referencing style for your report. Remember that plagiarism is an academic offence, and may lead to severe penalties if found guilty. The appendices should include a reference list, and other items that you may wish to use to support your report, for example tables, graphs and calculations, if any. You should use a MINIMUM of three references. Assessment Criteria: Your essay will be assessed based on the criteria set by the University of Sussex for coursework assignments.