Finance — Practice Case 2

Finance — Practice Case 2

Case (120 minutes)

Southwestern Community College (SCC) is a key player in the post-secondary landscape in Southwestern Canada. Since 2019, SCC has been aggressively competing for student enrolment by offering a comprehensive scholarship and bursary program. Investment and management of the scholarship and bursary endowment fund was outsourced to Jones West & Associates (JWA) from 1983 until 2018. Starting in 2019, SCC’s board of governors decided to manage the funds internally. The board has been reviewing the performance of the endowment fund. The board is concerned about the investment decisions and the performance of the fund, as it only receives sporadic reports.

Management of the endowment fund is the responsibility of the VP of Finance, but he has not been able to devote a significant amount of time to the fund. However, he insists on continuing to make all investment decisions. You, CPA, have just been hired as the manager of scholarship and bursary endowment services for SCC.

It is now late January 2022. The VP of Finance provides you with background information on the endowment fund’s management and historical performance based on the calendar year end in Appendix I. He asks that you prepare a comprehensive report to the board, evaluating the historical performance and risk profile of the endowment fund over the past six years. You will need to provide an analysis of the endowment fund’s performance and/or composition while under JWA management (2016 to 2018) compared to the period under SCC management (2019 to 2021), in each of the following areas:

  1. The overall net return of the portfolio, with comments on volatility and overall portfolio growth
  2. The asset mix of the portfolio and each asset class compared with industry benchmarks (Appendix II)
  3. Compliance with the Investment Policy Statement (IPS) (Appendix III)

He also asks you to forecast the endowment fund balance over the next three years and to look at the policies and procedures with respect to buying and selling investments and the oversight of the endowment fund. He would like you to outline any concerns or recommendations for improvement that you may have in your report.

Your response should be no longer than 3,600 words, excluding any Excel files.

Chartered Professional Accountants of Canada, CPA Canada, CPA

are trademarks and/or certification marks of the Chartered Professional Accountants of Canada.

© 2022, Chartered Professional Accountants of Canada. All Rights Reserved.

Les désignations « Comptables professionnels agréés du Canada », « CPA Canada » et « CPA » sont des marques de commerce ou de certification de Comptables professionnels agréés du Canada.

© 2022 Comptables professionnels agréés du Canada. Tous droits réservés.

Appendix I

Background information on the endowment fund

Investment earnings are an important funding source for the college. Considering the growth in the net asset value (NAV) of the endowment fund, the board of governors established its IPS in 1981 and later updated it in November 2002. The IPS plays a pivotal role in determining the extent that the endowment fund will be able to sustain a stable flow of meaningful benefits to beneficiaries.

The NAV, investment return, and distributions over the past six years are as follows (in $’000s):

($‘000s, rounded)201620172018201920202021
NAV, beginning3,2003,2233,2873,2973,3543,143
Gross investment return124160106240–44259
Management fees / transaction costs  –54  –48  –46  –33  –7  –6
Scholarship distributions–47–48–50–150–160–165
NAV, ending3,2233,2873,2973,3543,1433,231
Investment return %3.9%5.0%3.2%7.3%–1.3%8.2%
Management fee %1.7%1.5%1.4%1.0%0.2%0.2%

Unless the board provides new direction, SCC does not plan to change the asset mix or distribution levels. Gross returns are anticipated to be 3.5% on the investments, less a 0.2% management fee over the next three years.

The asset mix of the endowment fund over the past six years is as follows:

 201620172018201920202021
Cash and short-term paper14%13%12%3%2%1%
Canadian fixed income55%54%56%19%18%15%
Canadian large cap equity20%21%19%49%39%36%
Canadian small cap equity3%4%2%7%10%11%
Real estateN/AN/AN/AN/AN/A10%
Foreign securities8%8%11%22%31%27%
 100%100%100%100%100%100%
Appendix I (continued)

Background information on the endowment fund

The return on each asset class in the endowment fund over the past six years is as follows:

 201620172018201920202021
Cash and short-term paper1.0%1.0%1.1%1.1%1.2%1.0%
Canadian fixed income4.1%3.5%4.0%3.7%4.0%4.2%
Canadian large cap equity6.1%10.2%1.0%9.2%–2.0%9.8%
Canadian small cap equity6.5%10.0%–1.5%12.0%–3.0%6.5%
Real estate0.0%0.0%0.0%0.0%0.0%6.0%
Foreign securities1.0%5.0%6.2%5.4%–3.1%10.2%

The following is a summary of the most significant investment activities over the past three years:

  • In 2021, an investment was made in Genesis Genomes (GG). GG is a start-up company that was spun off from SCC’s innovation department. The investment cost is included in the small capitalization asset class and represents a third of the asset class’ value.
  • The large cap Canadian equity asset class consists of an exchange-traded fund that tracks the top 15 dividend paying stocks in Canada.
  • In 2019, SCC sold a significant number of its fixed income investments. The fixed asset class now consists of two investments: an exchange-traded bond fund that tracks high-quality Canadian corporate bonds and a 30-year bond of a large Canadian telecom company. These two investments are approximately equal in value in 2021.
  • The foreign securities class consists of an exchange-traded fund that tracks the common stock of the 30 largest companies in the world.
Appendix II Benchmark asset class returns

The following are the historical benchmark returns for each asset class:

    Asset class    BenchmarksAverage historical return 2016-2018Average historical return 2019-2021
Cash and short-term paperBank of Canada 91-Day Treasury Bills0.9%1.2%
Canadian fixed incomeBank of Canada Long-Term Bonds3.8%4.3%
Canadian large cap equityS&P/TSX Composite Index4.6%6.2%
Canadian small cap equityS&P/TSX SmallCap Index3.0%4.5%
Real estateS&P/TSX Capped Real Estate Index5.5%6.0%
Foreign securitiesS&P Global Index5.8%7.7%

The risk-free rate for the six-year period is as follows:

 201620172018201920202021
Cash and short-term paper1.0%1.0%1.1%1.1%1.2%1.0%
Appendix III

Extracts from the Investment Policy Statement

1.     Canadian fixed income securities

Not more than 5% of a portfolio shall be invested in debt issues of any one issuer.

2.     Canadian equities
  1. An investment must be listed on a recognized Canadian exchange.
  • Not more than 8% of a portfolio shall be invested in the equity of any one issuer.
  • Not more than 15% of a portfolio shall be invested in “small capitalization” stocks, and not more than 1% of the portfolio shall be invested in a small capitalization issuer (market capitalization of less than $300 million).
3.     Real estate

Real estate investments shall not exceed 10% of the value of any portfolio.

4.     Foreign investments

Not more than 30% of the value of a portfolio shall be invested in foreign content. Securities must adhere to the same investment guidelines established for Canadian investments (sections 1 and 2).

5.     Asset mix and rate of return expectation
  1. Asset mix

At no time shall the total equity component of the endowment portfolio exceed 80% of the total market value of the portfolio.

  • Diversification

The endowment portfolio should always contain at a minimum: 3% Canadian cash equivalents, 15% Canadian fixed income securities, and 10% Canadian equities.

  • Rate of return objective

Three-year annualized return in the order of 2.5% to 3.5% net of the investment management fees and transaction fees.

Order Now

Get expert help for Finance — Practice Case 2 and many more. 24X7 help, plag free solution. Order online now!

Universal Assignment (May 28, 2023) Finance — Practice Case 2. Retrieved from https://universalassignment.com/finance-practice-case-2/.
"Finance — Practice Case 2." Universal Assignment - May 28, 2023, https://universalassignment.com/finance-practice-case-2/
Universal Assignment August 3, 2022 Finance — Practice Case 2., viewed May 28, 2023,<https://universalassignment.com/finance-practice-case-2/>
Universal Assignment - Finance — Practice Case 2. [Internet]. [Accessed May 28, 2023]. Available from: https://universalassignment.com/finance-practice-case-2/
"Finance — Practice Case 2." Universal Assignment - Accessed May 28, 2023. https://universalassignment.com/finance-practice-case-2/
"Finance — Practice Case 2." Universal Assignment [Online]. Available: https://universalassignment.com/finance-practice-case-2/. [Accessed: May 28, 2023]

Please note along with our service, we will provide you with the following deliverables:

Please do not hesitate to put forward any queries regarding the service provision.

We look forward to having you on board with us.

Get 90%* Discount on Assignment Help

Most Frequent Questions & Answers

Universal Assignment Services is the best place to get help in your all kind of assignment help. We have 172+ experts available, who can help you to get HD+ grades. We also provide Free Plag report, Free Revisions,Best Price in the industry guaranteed.

We provide all kinds of assignmednt help, Report writing, Essay Writing, Dissertations, Thesis writing, Research Proposal, Research Report, Home work help, Question Answers help, Case studies, mathematical and Statistical tasks, Website development, Android application, Resume/CV writing, SOP(Statement of Purpose) Writing, Blog/Article, Poster making and so on.

We are available round the clock, 24X7, 365 days. You can appach us to our Whatsapp number +1 (613)778 8542 or email to info@universalassignment.com . We provide Free revision policy, if you need and revisions to be done on the task, we will do the same for you as soon as possible.

We provide services mainly to all major institutes and Universities in Australia, Canada, China, Malaysia, India, South Africa, New Zealand, Singapore, the United Arab Emirates, the United Kingdom, and the United States.

We provide lucrative discounts from 28% to 70% as per the wordcount, Technicality, Deadline and the number of your previous assignments done with us.

After your assignment request our team will check and update you the best suitable service for you alongwith the charges for the task. After confirmation and payment team will start the work and provide the task as per the deadline.

Yes, we will provide Plagirism free task and a free turnitin report along with the task without any extra cost.

No, if the main requirement is same, you don’t have to pay any additional amount. But it there is a additional requirement, then you have to pay the balance amount in order to get the revised solution.

The Fees are as minimum as $10 per page(1 page=250 words) and in case of a big task, we provide huge discounts.

We accept all the major Credit and Debit Cards for the payment. We do accept Paypal also.

Popular Assignments

MQBS7030 Final Assessment Data Analysis and Report

ASSIGNMENT TASK: For this assignment, you need to refer to “Fringe” dataset. Fringe is concerned with the factors that contribute to the fringe benefits of employees. The dataset includes a range of different variables, which allows for a range of different tests to be performed. You should note that our

Read More »

MIS770 Foundation Skills in Business Analysis

MIS770 Foundation Skills in Business Analysis Department of Information Systems and Business Analytics Deakin Business School Faculty of Business and Law, DeakinUniversity Assignment Two Analysis of Click Sales Data Particulars Assurance of Learning This assignment assesses the following Graduate Learning Outcomes and related Unit Learning Outcomes: Graduate Learning Outcome (GLO)

Read More »

ITECH7407 – Real Time Analytics

Assessment Task – Data Analytics Assignment Overview For this assessment task, you will work in a group to analyse a selected data set, and provide recommendations to the leadership of the company based on your findings. Timelines and Expectations Percentage Value of Task: 25% Due: Week 11, Sunday 5pm Minimum

Read More »

BSB123 Data Analysis

BSB123 Data Analysis Research Report Assessment Semester 1, 2021 Due Date: 11:59 30th May The data for the Assignment can be found in the file Research Report Assessment (2021-01).xlsx on Blackboard The Problem FringeTech is an information technology / electrical engineering company that employs thousands of people Australia wide. Recently

Read More »

Final Analysis Assignment Help

Refer to the attached excel file, answer the questions below. Use graph if required. The file that can be accessed through the link below contains data on 100 employees in a particular occupation. Suppose that interest centres on investigating the factors that explain salary differences. The data set contains the following

Read More »

VETS6103 Data Analysis Assignment

Factors influencing milk production in Australian dairy cattle Assignment overview: This assignment involves analysing a dataset, interpreting results, and drawing conclusions based on the analyses. The dataset can be found in the file “practical_assignment_2021.xls” which is on Canvas under the Assignments folder. It is a group task worth 50% of

Read More »

ECON 1030 – BUSINESS STATISTICS

ECON 1030 – BUSINESS STATISTICS 1: Individual Assignment   Instructions: This is an individual assignment with a total of 40 marks. The allocation of marks is as follows: Statistical Analysis     (including excel) 32 Professional Report 8              Total 40 The response to the assignment must be provided in the form

Read More »

Assessment 3: Public Health Data Analysis

Assessment 3: Public Health Data Analysis Weighting: 30 % Details of task: This assignment involves the presentation and interpretation of descriptive statistics and statistical test results. On completion of this assessment task, you will be able to: Word limit: This assessment is 2,500 word equivalent with a focus on calculations

Read More »

Log Book Entry 2: Association and Regression

Submission deadline: 11:59pm, 7th December, 2021. All analytics tasks must be completed using R, and should be reproducible from the R code, which must be submitted as an appendix. This log book entry will focus on using association and regression to examine the relationships between multiple variables. Using the ames_train

Read More »

Assignment 2 (Individual): Data Analysis Project

Assignment 2 (Individual): Data Analysis Project (50%): The retail bank that you work for recently ran a telephone marketing campaign to encourage customers to subscribe to a term deposit. Data was obtained from the marketing campaign, internal systems relating to the characteristics of the customer as well as whether or

Read More »

BI7138: Biodiversity Informatics

Biodiversity Informatics Assessment 1 Biodiversity Informatics Assessment 1 The Red Kite (Milvus milvus) is a scavenging raptor found throughout Europe and native to Britain. Red Kites were once common throughout Britain. During the last century their populations were reduced to just a handful of birds in the Welsh valleys by

Read More »

MGMT Course Assignment Fall 2021

Contents Contents General Information. 2 Rules. 2 Outside sources. 3 Scenario. 3 What you need to do. 4 Part 1 – Exploratory data analysis. 4 Table 1. 4 Part 2 – Training and testing set (sample) 4 Table 2. 5 Part 3 – Simple linear regression. 8 Table 3. 8

Read More »

CM 4223– Company Strategic Planning

SWOT Analysis Project Report Guidelines   Introduction/Overview/Background This section is an introduction of your company. Discuss things such as company history, background, leadership team, and location. Ensure that you mention who you are and what you do. If there are global operations, highlight this as well. Mention any goods and/or

Read More »

Surveying (48320) Final Assignment – Major Project

Surveying (48320)  AUTUMN 2023 Final Assignment – Major Project Weight: 40% Due date: 02/06/2023 Student Name:     ________________   Student Number: ______________ Submission Date: ______________________ Submission Component and Marks Awarded Marks   PLAN:     Find Scale of plan and explain 4   9 Bearing and Distances of three lines 3

Read More »

IAP607BM Independent Critical Analysis Project

ASSESSMENT 2 BRIEF Subject Code and Title IAP607BM Independent Critical Analysis Project Assessment Group Presentation of Preliminary Findings Individual/Group Group Length 10-minute presentation and 10-minute Q&A (+/- 10%) Learning Outcomes This assessment addresses the following Subject Learning Outcomes:   Critically review and synthesise the literature as it applies to the

Read More »

SEO PLAN Assignment Help

SEO PLAN Review the SEO slides, SEO videos, and other SEO resources (word files, examples, templates) before doing the assignment.  Choose a “client”, a small to a medium size company, that does not rank too high on search engines. Follow the step by step process described below and create an

Read More »

CET333 Product Development ePortfolio

UNIVERSITY OF SUNDERLAND SCHOOL OF COMPUTER SCIENCE MODULE CODE: CET333 MODULE TITLE: Product Development MODULE ASSESSOR:   ASSESSMENT: 1 of 1 TITLE OF ASSESSMENT: Product Development ePortfolio ASSESSMENT VALUE: 100% PLEASE READ ALL INSTRUCTIONS AND INFORMATION CAREFULLY. This assignment contributes 100% to your final module mark. Please ensure that you

Read More »

ETF2100/5900 Introductory Econometrics Assignment 2

ETF2100/5900 Introductory Econometrics Assignment 2 — A Case Study on the Birth-weight of Baby Important notes: Notation used in the assignment needs to be typed correctly and properly. Incorrect (or inconsistent) notations are treated as wrong answers. We are interested in studying whether a mother’s smoking affects the birthweight of

Read More »

HA1011 Applied Quantitative Methods Group Assignment

   HOLMES INSTITUTE   FACULTY OF HIGHER EDUCATION Assessment Details and Submission Guidelines Trimester T1 2022 Unit Code HA1011 Unit Title Applied Quantitative Methods Assessment Type Assessment 2 Assessment Title Group Assignment (Min of 2 and maximum of 4 members in a group. Please check the group self-enrollment guide in

Read More »

Practical Assessment 2 Data Wrangling

Practical Assessment 2 Data Wrangling Assessment type: Written report (PDF document) using R Markdown Due date: 26th May 2022, 5 pm Melbourne time Weighting: 30% Word limit: Maximum 25 pages Feedback mode: Feedback will be provided using Canvas marking tool and general text comments. Group assessment You will work on

Read More »

Using aggregation functions for data analysis

Using aggregation functions for data analysis Total Marks 100, Weighting 20% The provided zip file contains the data file [RedWine.txt] and the R code [AggWaFit718.R] to use with the following tasks, include these in your R working directory. You can use the R script [template.R] to organise your code. Clarification

Read More »

EC2509 – Econometrics B

EC2509 – Econometrics B This EC2509 problem set must be handed in via Turnitin by Wednesday 23th February 2022, 23.59 Please submit your answer as a single PDF document. The document should contain the results as well as your written answer to the questions, and an appendix with your full

Read More »

Research Report: Assignment 2

Due Date/Time: 3:00pm (AWST), Friday May 13th, 2022 Marks: This assignment will be marked out of 100 and is worth 40% of your final grade for PSEM. Topic Overview: In this assignment, you will be analysing and interpreting the results of research seeking to investigate whether using diagnostic labels to

Read More »

PSEM: Research Report Data Analysis

PSEM: Research Report Data Analysis The next two weeks of content are essential for your second assessment. You will be analysing and reporting the data collected for your research report assessment (worth 40% of your grade for PSEM). At the end of these two weeks, you should be in a

Read More »

Wage Gaps Major Project

As part of your assessment, you will submit a written project worth 40% of your  final mark. This document sets out the main aspects of this project.  The aim of the project is to integrate the learning from the entire module in the service of  conducting your own exploration of

Read More »

Can't Find Your Assignment?

Open chat
1
Free Assistance
Universal Assignment
Hello 👋
How can we help you?