Your hypothetical Aunt Martha is considering giving your 452 portfolio to you, but she thinks you are just
partying at college and doesn’t want to reward you unless you are accumulating valuable knowledge. She
decides to give you an opportunity to prove you are worthy. If not, she will liquidate the portfolio and give the
money to your least favorite charity. She expects a report assessing the current portfolio and your plans
regarding the portfolio.
Format and organization are your choice, but must include:
Your long-term financial goal (> 5 years)
Goal must be specific and achievable
How much more money do you need to achieve your goal?
How much risk must you take on to achieve this goal? Is the risk reasonable for the time period? Are you risk
averse or risk tolerant?
What will you do if the portfolio value falls short of your goal?
Analyze current holdings, including pros and cons
Analyze returns for 3 month holding period
Analyze risk, descriptive statistics, asset allocation
Economic/Market/Sector analysis, ratio analysis, fundamental valuation
Optional: technical analysis
Performance evaluation: beta, Sharpe, Treynor, Jensen’s alpha, etc.
For some measures the actual 3 month return will be appropriate, but for others you should consider a longer
time period
Your plan for the next 5 years: rebalance, buy/sell (realize losses/gains), new investments?
Your plans must be very specific and detailed
Maximum 5 pages, not including exhibits. Incorporate as much of the course material as possible. You can
ignore tax and estate planning implications for yourself and Aunt Martha (very important but we haven’t
covered those topics in this class
Sample Solution
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