Business Finance - Accounting TVM Assignment

How would you classify your family’s overall financial situation?

No savings and significant debt.

No savings and some debt.

No savings and little to no debt.

Some savings and significant debt.

Some savings and some debt.

Some savings and little to no debt.

Strong savings and significant.

Strong savings and some debt.

Strong savings and little to no debt.

What is your current net worth?

Liquid assets (available for emergencies) $ + Invested assets (not earmarked for emergencies) $ + Fixed assets (such as real estate property) $ - Mortgage debt $ - Consumer debt (such as credit cards, loans, lines of credit) $ = Estimated Net Worth $

What is your gross monthly family income? $

How much is your cash surplus / deficit at the end of each month? $

What, if any, changes are you expecting to your cash flow during the

next one to three years?

How would you describe your understanding about investing?

Limited: I’m confused about how investments work.

Average: I understand the difference between the expected risk and return relationship of different investments, including GICs, bonds and stocks.

Sophisticated: I understand how domestic and foreign capital markets work, including how different assets respond to changing economic variables.

What net rate of return do you expect to earn on your investment portfolio?

Do you know how much risk you need to take in your investments to meet your goals?

Yes, I need %.

No, I do not know.

Willingness to Take on Risk

What is the primary purpose for your portfolio?

Safety – I do not want to risk losing any portion of my money. 0 points

Inflation protection – I want the value of my money to maintain

pace with rising costs. 2 points

Income – I want to draw an income from my portfolio. 4 points

Growth – I want to grow my money. 6 points

What type of portfolio would you like to own?

One that mostly contains mostly term deposits, guaranteed

investment certificates, principal protected notes and market

linked guaranteed investment certificates. 0 points

One that contains mostly fixed income securities, such as bonds

fixed income mutual funds or fixed income exchange-traded

funds. 2 points

One that contains mostly equity mutual funds or exchange-

traded funds. 4 points

One that contains mostly stocks from individual companies. 6 points

Which of the following portfolios are you most likely to invest in?

Portfolio A: Worst return in one year = 0%

Best return in one year = +3% 0 points

Portfolio B: Worst return in one year = -6%

Best return in one year = +8% 2 points

Portfolio C: Worst return in one year = -15%

Best return in one year = +12% 4 points

Portfolio D: Worst return in one year = -25%

Best return in one year = +15% 6 points

Which of the following portfolios would you be likely to invest in over the long-term?

Portfolio A – Does not fluctuate in value and earns a minimal

rate of return on average. 0 points

Portfolio B - Fluctuates in value by small amounts and has the

potential to earn a low rate of return on average. 2 points

Portfolio C – Fluctuates in value by medium amounts and has

the potential to earn a medium rate of return on average. 4 points

Portfolio D – Fluctuates in value by significant amounts

and has the potential to earn a significant rate of return

on average. 6 points

How long would you be willing to wait for your investments to regain any lost value?

Less than three months. 0 points

Three to six months. 2 points

Six months to one year. 4 points

One to two years. 6 points

For retirement investments only, which would you consider a bigger risk?

Failing to retire when you plan.

Running out of money during retirement.

Ability to Take on Risk

How long will you continue to remain invested before you will begin withdrawing a significant portion of your money from your investment portfolio?

Less than three years 0 points

Between three and five years 2 points

Between 6 and 10 years 4 points

Over 10 years 6 points

After reaching your goal, over how many years do you plan to make withdrawals from your investment portfolio?

Less than three years 0 points

Between three and five years 2 points

Between 6 and 10 years 4 points

Over 10 years 6 points

How long are you willing to postpone meeting your goal, if needed?

Less than one year. 0 points

One to three years. 2 points

Three to five years. 4 points

Over five years. 6 points

Total Point Calculation

Willingness to Take on Risk

+ Ability to Take on Risk

= Total