Assignment
Investor Profile:
- Name: Arjun Palwai
- Age: 45 years
- Monthly Income: ₹90,000
- Monthly Expenses: ₹54,000
- Investment Time Horizon: 15 years
- Risk Appetite: Moderate to High (60% Equity / 40% Debt)
Consumption details:
- Life Insurance Premium – Rs. 3000 per month
- Health Insurance Premium – Rs.2400 per month
- Monthly Expenditure – Rs. 54,000
- Contributes Rs.18,000 cash per month towards emergency fund
What is the total expenditure per annum?
- Rs.54,000
- Rs.2,16,000
- Rs. 6,48,000
- Rs.1,51,200
Monthly expenses – Rs.54,000*12 = Rs.6,48,000
What is the monthly surplus available to Arjun Palwai for investment?
- Rs. 12,200
- Rs.12,660
- Rs.12,500
- Rs.12,600
Monthly Savings: u20b912,600 (u20b990,000 – u20b954,000 – u20b93,000 Life Insurance – u20b92,400 Health Insurance)
How much he should invest in equity as per the risk appetite?
- Equity: u20b96330 (50%)
- Equity: u20b97,560 (60%)
- Equity: u20b98,820 (70%)
- Equity: u20b910,080 (80%)
As the risk appetite is Moderate to high, it would be suggested that he invest 60% in Equity
Investing in a Debt Mutual Fund & investing in FDs are feasible or not?
- Yes
- No
- Cannot be determined
- Invest in Mutual Funds is better
Yes it is feasible to invest in a Debt Mutual Fund through an SIP and invest in FD's with varying maturity periods (e.g., 1, 3, 5 years) to spread the liquidity.
Mr. Palwai's investment horizon of 15 years suggests that he should primarily focus on:
- Short-term debt funds
- Liquid funds
- Equity-oriented mutual funds
- Fixed deposits
A longer investment horizon allows for higher equity exposure to benefit from potential long-term growth.
The primary purpose of allocating 15% of Mr. Palwai's portfolio to gold is:
- To generate high returns
- To hedge against inflation
- To diversify the portfolio
- To meet short-term liquidity needs
Gold is often considered a diversifier, helping to reduce overall portfolio risk.
What is the primary goal of asset allocation in portfolio management?
- Maximizing returns
- Minimizing risk
- Balancing risk and return
- Outperforming the market
Asset allocation involves distributing investments across different asset classes to optimize the portfolio's risk-return profile.
What is the concept of diversification in portfolio management?
- Investing in a single asset class
- Spreading investments across different asset classes
- Concentrating investments in high-performing stocks
- Using leverage to increase returns
Diversification reduces portfolio risk by spreading investments across various asset classes with different risk-return characteristics.
Which of the following is NOT a factor to consider when determining an investor's risk tolerance?
- Age
- Investment horizon
- Income level
- Market trends
Market trends are dynamic and can change rapidly. Risk tolerance is based on personal factors, not short-term market fluctuations.
Complete Course