Case Study: Fred Wheeler's Wheels Inc.
Case Study: People's Investment Company
As an investment advisor for Fred Wheeler of Wheeler's Wheels, Inc., you have provided him with a list of ten "hot" investments falling into four broad categories for immediate investment opportunities. The table below summarizes these investments together with their important investment characteristics. Note that First General Real Estate Investment Trust is listed under both Equities and Real Estate.
Category
Investment
Expected Annual After-Tax Return
Liquidity Factor
Risk Factor
Equities
Zizzle Corporation
General Lee's Barbecue Huts
First General REIT
15.0%
17.0%
17.5%
100
100
100
60
70
75
Debt
Western California Electric
Zizzle Corporation
San Marcos Rapid Transit …show more content…
Because you are a successful investment counselor, you have solicited the following information from Fred to guide you in recommending your investment strategy.
Fred is relatively cautious and desires an average liquidity factor of at least 65 and an average risk of no more than 55. At most, $60,000 is to be invested in Zizzle Corporation stocks or bonds. No more than 40% of the portfolio is to be invested in any one category. With the exception of the Money Market Fund, no more than 20% of the portfolio can be in any one investment.
At least $1,000 must be put in the Money Market Fund, at most $15,000 is to be placed in the All Saver's Certificates. The total investment in debt is to be no more than $90,000, and at least $10,000 must be invested in a T-Bill Account.
Recommend an investment portfolio for Fred Wheeler. Analyze the limitations of the constraints.
Among other analyses, determine the expected return of additional dollar investments. Which of his constraints are limiting, which are most limiting, and what, if any, recommendations would you make to Fred concerning his constraints?
Case
As an investment advisor for Fred Wheeler of Wheeler's Wheels, Inc., you have provided him with a list of ten "hot" investments falling into four broad categories for immediate investment opportunities. The table below summarizes these investments together with their important investment characteristics. Note that First General Real Estate Investment Trust is listed under both Equities and Real Estate.
Category
Investment
Expected Annual After-Tax Return
Liquidity Factor
Risk Factor
Equities
Zizzle Corporation
General Lee's Barbecue Huts
First General REIT
15.0%
17.0%
17.5%
100
100
100
60
70
75
Debt
Western California Electric
Zizzle Corporation
San Marcos Rapid Transit …show more content…
Because you are a successful investment counselor, you have solicited the following information from Fred to guide you in recommending your investment strategy.
Fred is relatively cautious and desires an average liquidity factor of at least 65 and an average risk of no more than 55. At most, $60,000 is to be invested in Zizzle Corporation stocks or bonds. No more than 40% of the portfolio is to be invested in any one category. With the exception of the Money Market Fund, no more than 20% of the portfolio can be in any one investment.
At least $1,000 must be put in the Money Market Fund, at most $15,000 is to be placed in the All Saver's Certificates. The total investment in debt is to be no more than $90,000, and at least $10,000 must be invested in a T-Bill Account.
Recommend an investment portfolio for Fred Wheeler. Analyze the limitations of the constraints.
Among other analyses, determine the expected return of additional dollar investments. Which of his constraints are limiting, which are most limiting, and what, if any, recommendations would you make to Fred concerning his constraints?
Case