Ms Hudson is 60 years of age, is in excellent health, pursues a simple but active lifestyle, and has no children. She has interest in a private company for R180 million and has decided that a medical research foundation will receive half the proceeds now and will be the primary beneficiary of her estate upon death.
Currently, the following assets are available for use in building an appropriate portfolio for h:
R90 million cash (from sale of the private company interest, net of a R90 million gift to the foundation)
R20 million stocks and bonds (R10 million each) R18 million warehouse property (now fully leased) R2 million value of his residence
a. Formulate and justify an investment policy statement setting forth the appropriate guidelines within which future investment
actions should take place. Your policy statement should encompass all relevant objective and constraint considerations.
b. Recommend and justify a long-term asset allocation that is consistent with the investment policy statement you created in Part a. Briefly explain the key assumptions you made in generating your allocation.
