Securities and Managed Investments Case Studies: DFP4_AS_v3

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Assignment
Securities and Managed Investments(DFP4_AS_v3)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number
Written assignment result (assessor to complete)
Result — first submission (Details for each activity are shown in the table below)
Parts that must be resubmitted:
Result — resubmission (if applicable)
Result summary(assessor to complete)
First submission Resubmission (if required)
Section 1 Case study 1: Questions 1–4 Not yet demonstrated Not yet demonstrated
Case study2: Questions 1–4 Not yet demonstrated Not yet demonstrated
Case study3: Questions 1–4 Not yet demonstrated Not yet demonstrated
Case study4: Questions 1–4 Not yet demonstrated Not yet demonstrated
Section 2 Short-answer questions: Parts A–C Not yet demonstrated Not yet demonstrated
Section 3 Short-answer questions: Parts A–C Not yet demonstrated Not yet demonstrated
Section 4 Short-answer questions: Parts A–B Not yet demonstrated Not yet demonstrated
Feedback (assessor to complete)
[insert assessor feedback]
DFP4_AS_v3

Before you begin
Read everything in this document before you start your writtenassignmentforSecurities and Managed
Investments (DFP4_AS_v3).
About this document
This document is the written assignment — half of the overall Written and Oral Assignment.
This document includes the following two (2) parts:
• Part 1: Instructions for completing and submitting this assignment
• Part 2: The assignment
• Section 1: Case study questions
– Case study 1: Establish relationship with client and identify client’s objectives, needs and
financialsituation
– Case study2:Analyse client’s objectives, needs, financial situation and risk profile to develop
appropriate strategies and solutions
– Case study 3: Present appropriate strategies and solutions to client and negotiate a financial plan,
policy or transaction
– Case study4:Agree the plan, policy or transaction and complete documentation
– Appendices:
> Investor risk profiles
> Approved products list.
• Section 2:Present appropriate strategies and solutions to client and negotiate a financial plan, policy or
transaction.
• Section 3:Agree the plan, policy or transaction and complete documentation.
• Section 4:Provide ongoing service where requested by client.
Note:Sections 2–4 questions relate to Case study 4.
Completing the writtenassignment
Complete Part 2:
Section 1
• Case study 1: Questions 1–4
• Case study 2: Questions 1–4
• Case study 3: Questions 1–4
• Case study 4: Questions 1–4
Section 2
• Parts A–C
Section 3
• Parts A–C
Section 4
• Parts A & B.
Page 2 of 41

Part 1: Instructions for completing and submitting this
writtenassignment
How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete
the assignment within your enrolment period. Your study plan is in the KapLearnSecurities and Managed
Investments (DFP4v3) subject room.
Word count
The word count shown with each question is indicative only. You will not be penalised for exceeding the
suggested word count. Please do not include additional information which is outside the scope of the
question.
Additional research
When completing this assignment, assumptions are permitted, although they must not be in conflict with
the information provided in the case studies.
You may also be required to source additional information from other organisations in the finance industry
to find the right products or services to meet your clients’ requirements, or to calculate any service fees
that may be applicable.
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your
work regularly.
• Use the template provided, as other formats will not be accepted for these assignments.
• Name your file as follows: Studentnumber_SubjectCode_Submissionnumber
(e.g. 12345678_DFP4_AS_v3_Submission1).
• Include your student ID on the first page of the assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is
clear and unambiguous.
Page 3 of 41

Submitting the writtenassignment
Only Microsoft Office compatible written assignments submitted in the template file will be accepted for
marking by Kaplan Professional Education. You need to save and submit this entire document.
Do not remove any sections of the document.
Do not save your completed assignment as a PDF.
The written assignment must be completed before submitting it to Kaplan Professional Education.
Incomplete written assignments will be returned to you unmarked.
The maximum file size is 20MB for the Written and Oral Assignment. Once you submit your written
assignment for marking you will be unable to make any further changes to it.
You are able to submit your written assignment earlier than the deadline if you are confident you have
completed all parts and have prepared a quality submission.
Please refer to the Assignment submission/resubmission instructions (pdf) in the Assessment section of
KapLearn for details on how to submit your written assignment.
Your Written Assignment and Oral Assignment must be submitted together on or before your due date.
Please check KapLearn for the due date.
The written assignment marking process
You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment.
If you reach the end of your initial enrolment period and have been deemed ‘Not Yet Competent’ in one or
more assessment items, then an additional four (4) weeks will be granted, provided you attempted all
assessment tasks during the initial enrolment period.
Your assessor will mark yourwrittenand oral assignment and return it to you in the Securities and Managed
Investments (DFP4v3) subject room in KapLearn under the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in
your written assignment. Failure to do so will mean that your assignment will not be accepted for marking;
therefore you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission
deadline to submit your completed written and oral assignment.
Page 4 of 41

How your written assignment is graded
Assignment tasks are used to determine your ‘competence’ in demonstrating the required knowledge
and/or skills for each subject. As a result, you will be graded as either competent or not yet competent.
Your assessor will follow the below process when marking your written assignment:
• Assess your responses to each question, and sub-parts if applicable, and then determine whether you
have demonstrated competence in each question.
• Determine if, on a holistic basis, your responses to the questions have demonstrated overall
competence.
You must be deemed competent in all assessment items in order to be awarded your qualification,
including demonstrating competency in:
• all of the exam questions
• the written and oral assignment.
‘Not yet competent’ and resubmissions
Should sections of your assignment be marked as ‘not yet competent’ you will be given an additional
opportunity to amend your responses so that you can demonstrate your competency to the required level.
You must address the assessor’s feedback in your amended responses. You only need amend those
sections where the assessor has determined you are ‘not yet competent’.
Make changes to your original submission. Use a different text colour for your resubmission. Your assessor
will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first
assessor’s comments in your assignment, so your second assessor can see the instructions that were
originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency
This written assignment is your opportunity to demonstrate your competency against these units:
FNSASICW503 Provide advice in securities
FNSASICT503 Provide advice in managed investments
FNSFMK502 Analyse financial market products for client
FNSFMK503 Advise clients on financial risk
Note that the Written and Oral Assignment is one of two assessments required to meet the requirements
of the units of competency.
We are here to help
If you have any questions about this written assignment you can post your query at the ‘Ask your Tutor’
forum in your subject room. You can expect an answer within 24 hours of your posting from one of our
technical advisers or student support staff.
Page 5 of 41

Part 2: The assignment
Section 1: Case study questions
Case study 1 —Arthur and Gwen
Background information
Arthur (61) and Gwen (62) have recently sold their four-bedroom home of 35 years, downsizing into a new
‘over 55s’ townhouse. This has generated net proceeds of $250,000, and as this is the first time they have a
significant amount of surplus funds, they have decided to seek some investment advice. After some
discussion, you have determined the following facts.
Employment
Arthur is still working, but will look to retire from the workforce in two years time. Arthur earns $120,000
(including super) as a meteorologist. Gwen does not work and has no intention of rejoining the workforce.
Savings and spending
Arthur is not currently making any contributions into super apart from his employer’s 9.5% SGC.
Since paying off their mortgage a few years ago, they have tended to save about $5000 every year from
Arthur’s income, which has been going to their savings account. They have looked at their budget over the
years and they figure that they spend about $1000 per week on bills, food and lifestyle expenses. This level
of spending will likely continue after Arthur is retired.
Page 6 of 41

Assets and liabilities
Asset Owner Value Liabilities Net value Notes
Personal assets
Family home Joint $500,000 $0 $500,000 Recent purchase price
Home contents Joint $130,000 $0 $130,000 Replacement value
Car Arthur $18,000 $0 $18,000 Hyundai Excel bought nine years ago new
Car Joint $10,000 $0 $10,000 Toyota Rav4 bought three years ago
second-hand
Transaction account Joint $10,000 $0 $10,000 Usually maintain float of $10,000;
surplus transferred into savings account
periodically
Total personal assets $668,000 $0 $668,000
Superannuation
Employer superannuation Arthur $590,000 n.a. $590,000 Balanced option
Employer superannuation Gwen $65,000 n.a. $65,000 Conservative option
Total superannuation $655,000 $655,000
Other investments
Savings account Joint $290,000 Nil $290,000 Includes net proceeds from downsizing
Total other investments $290,000 Nil $290,000
Total investments $945,000 $945,000
Net worth $1,613,000 $0 $1,613,000
Investment objectives
• Neither Arthur nor Gwen has had any experience with investing (apart from term deposits). They were
both surprised to hear that they had the ability to decide how their superannuation was invested.
• They are definitely worried about losing money through their investments, and when first asked they
indicated that they want to eliminate the risk of any capital losses. However, after some discussion,
you uncover that they would be comfortable with some volatility, including short-term losses,
but wanted to limit losses in any one year to –10% of the starting investment value.
• Arthur feels that a return of about 10–15% p.a. would be good. He saw the value of his old home
increase fivefold since they initially purchased it and understands that investments can earn a lot more
than term deposits. Gwen commented that she has a friend ‘who does some sort of FX trading and she
`makes a lot of money through investing’.
• They would like their investments to cover their spending through retirement, and will leave their only
child whatever assets they have left when they have passed away.
• Gwen does not want her money invested in companies that she believes are harming society,
including tobacco companies, alcohol suppliers and coal miners.
• Arthur is interested in investing more in emerging technologies and developing countries as he feels this
is a common-sense way to make money faster.
• They do not want to invest in hedge funds as they have heard negative reports over the years about the
way they operate.
• They want their investments to be managed all together (i.e. combined risk profile).
Page 7 of 41

Case study 1: Question 1
(a) Determine the clients’ ability to take on investment risk (low, average, high) and provide
two (2) key reasons for this assessment. (100 words)
(b) Determine the clients’willingness to take on investment risk (low, average, high) and provide
two (2) key reasons for this assessment. (100 words)
Response
A. Arthur and Gwen both need a return of 10-15% and also concern for the risk associated with their
investment of 10%. Arthur and Gwen also need to overcome their long term losses probability from their
investment which drives them to a moderate risk investor profile in which they are ready to take risk on a
affordable point on their investment. Arthur and Gwen looks for the future project which secure their
retirement plans and also they are not interested in investing I hedge options for their investment. It
defines an investor who invested in the option which merely moderate for their investment option.
B. Client already discussed about the risk which they can suffered for their investment option. They are able
to suffer the loss of 10% on their investment. Clients are the investor which ready to take risk but on
moderate level accordingly so they coma in the range of average risk taker. Both Arthur and Gwen are very
much concern about risk factor associate with investment option and they are willing to take average risk
for future plan. Arthur and Gwen willing to do investment option which demonstrate them a moderate risk
for their money invested.
Assessor feedback for Case study 1: Question 1 Resubmission required?
No
Case study 1: Question 2
Is the clients’ return objective appropriate? Why or why not? What further actions should be taken prior to
establishing an investment strategy? (200 words)
Response
Arthur and Gwen define risk for their investment which is 10% on the investment value and also they
expected returns of 10-15% on their investment. Returns arebased on market conditions and market
fluctuation. As client want of invest in a moderate investment option so they can minimise their risk by
investing in secured option.Arthur and Gwen objective is appropriate according to their future needs and
requirement. They developed a portfolio which can provide them a minimum risk and an average returns
for their investment. They are needed to develop a proper portfolio mix of secured and vibrant investment
options which can also provide them return as well as minimize their risk associate with portfolio. A mixed
portfolio of vibrant and secured portfolio can provide a proper safety of their money and also adequate
return which they expected on their return. Arthur and Gwen need to evaluate the various options for
investment and provide weighted according to the risk and return associate with that option so that they
are able to construct an adequate mix of portfolio which fulfil their requirement. Arthur and Gwen also
evaluate future probability with their investment of share and other vibrant investment option. They
options are had a complex and dynamic environment for their future return probability and also influenced
by various factor.
Assessor feedback for Case study 1: Question 2: Resubmission required?
No
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Case study 1: Question 3
Refer to the risk profiles in Appendix 1.Which of these would be most appropriate to meet the
clients’investment needs? (100 words)
Response
Balanced portfolio is suggested to Arthur and Gwen who are able to satisfy the need and requirement of
client. As it can minimize their risk because it include maximum share of 35% in Fixed deposits which is less
risky and provide a stable returns for their future. Balanced portfolio also provide growth of 47% on their
investment as in this portfolio approx. 40% part is covered by vibrant option which provide growth facility
to investor for their financial decision. As this investment option can be idle for Arthur and Gwen so that
they can grow and also secured their money for future needs and requirement.
Assessor feedback for Case study 1: Question 3: Resubmission required?
No
Case study 1: Question 4
List and describe four (4) different investment constraints the clientsexhibit. (200 words)
Response
Investment decision is based on various constraints which can influence the decision. Portfolio can be
defines by considering various factor which can limited the portfolio decision for Client
 Risk is the main constraint which can influence the portfolio decision of client as client need to
consider the risk as 10% for their investment and they are concern for the risk minimum
investment option for their investment.
 Return also a major constraint which influences the financial decision of portfolio management and
construction. Investor always want of maximize their return and main purpose of investment is
return which is drives from a specific portfolio. Arthur and Gwen also want a return of 10-15% on
their portfolio or investment for future needs.
 Investor invests money in portfolio to maximize wealth. Arthur and Gwen need to a stable return
but they also need to be growing their wealth as the year passes so they need to choose the plan
which provides a stable growth in the market for their wealth.
 Tax benefit also concern for client as they want to tax saving in portfolio investment option which
can provide a broad mind to define the portfolio and selected investment option for client. Arthur
and Gwen need to save their money and also save taxes on their income which also helps by
portfolio like Tax saving options, Tax free fixed deposit etc.
Assessor feedback for Case study 1: Question 4: Resubmission required?
No
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Case study 2— Marius and Corsette
Background information
Marius (32) is a systems engineer in the local arm of a large multinational software company. He is married
to Corsette (28). They have two young children and they live in an apartment in the inner city. He has
recently inherited his grandfather’s Australian share portfolio, a property located in a different city and
some cash, and he is looking for investment advice. Following a lengthy fact-find meeting with only Marius,
you have collated the following information.
Employment
Marius has been working for his current employer for 18 months and earns $135,000 plus 9.5% SGC.
Corsette has never been gainfully employed, but is currently studying part-time. Marius has no plans to
retire in the foreseeable future.
Savings and spending
Marius and Corsette spend most of their income, with any surplus funds usually used to fund new gadgets,
cars or holidays.
Assets and liabilities
Asset Owner Value Liabilities Net value Notes
Personal assets
Family home Joint $700,000 $400,000 $300,000 Purchased 5 years ago. 25 years left
on mortgage
Home contents Joint $100,000 $0 $100,000 Replacement value
Car Joint $38,000 $24,000 $14,000 Toyota Kluger
Car Joint $18,000 $0 $18,000 Mini Cooper
Boat Marius $25,000 $0 $25,000 His father’s old boat
Transaction account Joint $2,000 $0 $2,000 Usually have at least $2,000
Total personal assets $883,000 $424,000 $459,000
Superannuation
Personal superannuation Marius $95,000 n.a. $95,000 High growth option
Total superannuation $95,000 $95,000
Other investments
Cash management account Marius $50,000 $0 $50,000 Inheritance cash. Receives income
from property and share account
(approx. $40k p.a.)
Investment property Marius $480,000 $0 $480,000 Inherited with a cost base of
$480,000
Australian share account Marius $650,000 $0 $650,000 Inherited with an aggregate cost
base of $240,000
Total other investments $1,180,000 $0 $1,180,000
Total investments $1,275,000 $0 $1,275,000
Net worth $2,158,000 $424,000 $1,734,000
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Investment objectives
• Marius doesn’t want to sell the inherited property as he has fond memories of spending time with his
grandparents in the house. He plans to rent it out indefinitely.
• Marius’s grandfather had generated a lot of wealth through investing in ASX-listed blue-chip companies
and he wishes to retain at least half of this inherited portfolio.
• Marius is not averse to borrowing funds to invest.
• Marius wants their investments to be managed all together (i.e. combined risk profile).
Risk profile
Marius has determined that his investments should be managed in line with that of a ‘growth’ investor.
He understands the risks that come with such a strategy, but is willing to accept these risks due to the long
timeframe he has until his potential retirement.
Case study 2: Question 1
(a) Determine the client’s ability to take on investment risk (low, average, high) and provide
two (2) key reasons for this assessment. (100 words)
(b) Determine the client’s willingness to take on investment risk (low, average, high) and provide
two (2) key reasons for this assessment. (100 words)
(c) Even though the investments are all in Marius’ name, why would it be appropriate to also ascertain
Corsette’s attitude towards investment risk? (100 words)
Response
A. Clients had the ability to take average risk so that they can invest in their portfolio options.
 Client had adequate financial condition in term of liquidity and investment which drives growth
investor and also able to taking risk for their investment and assume high risk for the return. Client
had net worth of $1,734,000which provides a base for their expansion or growth portfolio profile in
which they can invest.
 Client is planned for their future benefits which help them in retirement plan. They are more
looking for long term goals from portfolio which defines the approach of investor toward
investment option.
C.
Even though the investment all in marius name but as a wife corsette also influenced the portfolio decision
related to investment activities. Marius is a person who is dynamic in nature but for proper decision he
discussed about the financial plans with corsetter which can influence the decision as it is appropriate to
understand attitude of Corsette toward investment risk and returns.Corsette can guide marius for better
decision making and identified the attitude of Corsette provide a adeqauate framework so that portfolio
can presented to client and also accepted by both on mutual understanding as it concern for the future of
Corsette as well as marius.
Assessor feedback for Case study 2: Question 1: Resubmission required?
No
Page 11 of 41

Case study 2: Question 2
(a) Identify the client’s main investment constraints. Are these objectives rational from an investment
point of view? (200 words)
(b) How might these constraints affect the client’s asset allocation? What are some appropriate ways
of dealing with this? (200 words)
A. Some of the constraints are as follows
 Return- As client is dynamic in nature so he wants to develop the plans which provide them high
return in a long term period. The main concern for portfolio construction is to earn maximum profit
which they can earn for their future needs and requirement.
 Risk – Risk is the constraints which most influenced the financial decision related to portfolio
selection and is the most dynamic constraints which provide motivations and attraction for their
investment.
 Tax saving – Portfolio construction had a constraint which influenced financial decision as it
consider a safer option for investor. Many of the investor choose Tax saving portfolio which provide
them saving and also some relief in taxation budget on the client so investment option which have
tax saving and a good rate of return can also attract the investor for investment activities.
 Time period – Time also a constraint which influenced the decision related to portfolio selection as
it covered the time period on which client need their financial requirement for their long term
prospective. As some of the client invests in the option which had time period of less than one year
and long term prospective also.
B. High returns portfolio always associated with high rate of risk which client need to suffer. Risk and return
are the major part for client as he is able to take risk for their future plan. Client decision is based on the
constraints which discussed above. Generally a portfolio or investment option which had high rate of return
associated with higher risk of the loss. For client risk is not a major problem. They are able to suffer losses
or risk for the option in the context of higher returns. Return provide a motivation and attraction point for
portfolio which attract investor for investing their money in the option. Returns are the constraint which
provides evaluate framework for investor as they expected some of the return form investment option and
in this scenario client are more attractive toward return so while selection of portfolio return can be major
point on which client want to discussed and evaluate various option for their investment. Marius hold a
dynamic personality in which he is more attract toward the security or portfolio option which provide them
higher return and wealth growth across the year. Further they also consider the time for which they want
to invest their money in portfolio.
Assessor feedback for Case study 2: Question 2: Resubmission required?
No
Case study 2: Question 3
What concerns might you have in regards to recommending gearing for this client? (100 words)
Response
Client had gearing of 4, 24,000 on the assets of 7, 38,000 which is half of the assets on charge. Client need
to be covered the cost of gearing and also cleared that gearing for the purpose of liquidity as they want to
invest in portfolio which need liquidity space to client. In that case gearing influence the cash and cash
equivalent which is able to invest in portfolio. Credit rating also calculated on the time of investment which
is suffered by gear and charges on assets so client need to overcome t
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