Always explain your answers based on what you have learned in class. Please note that each question has two parts. ! 1. Kimberly and Greg purchased a Starbucks in 2014, they currently have 50 employees. During the employees’ annual performance evaluations, they notice that their employees are lacking in certain areas. What can Kimberly and Greg do to identify their employees’ weaknesses and areas of improvement (explain)? AND--How could the answer to Part I help their employees improve their productivity ? 2. Tyler returned from his lunch break to discover that his supervisor searched through his desk drawers and cabinets. He is a HR Manager for the federal government. Is Tyler’s supervisor allowed to search through his desk drawers? Why or why not? The VP of HR informed your friend Lola, a HR Coordinator, that the company is launching a new “Let’s Go Green” initiative. The VP needs Laura to identify three HR activities that can be done “greener” but without jeopardizing the quality standards of the HR department. Give three (3) examples of HR functions that can become part of the “Let’s Go Green” initiative and explain how each one could benefit the company in the long run. 3. Your friend works in Providence, Rhode Island and he is fired at-will for refusing to destroy evidence of corporate misdeeds. On which basis if any can your friend challenge his firing? Your friend gets a new job as a security guard in which he mostly sits around and does nothing. For what reason if any is your friend’s new job stressful? 4. Bobby, Dana, and Laura purchased a construction company, Contractors, Inc. in 2015. During a recent employee recognition event, they overheard some rumors about unionization, something they have tried to avoid for the past year. One employee, Miranda, is an undocumented worker but she is interested in joining a union. Can Miranda legally join a union and why? Recently, Dana became aware that some of the employees were caught complaining about pay and working conditions to one another on Twitter. She reported this to Bobby and Laura. You have been hired as their HR Consultant. They would like to terminate these employees ASAP but need to know if this is legal, please explain how you would respond to them. 5. You are the owner of a boutique in Hoboken, NJ that employs 25 staff. Your current operating hours are 9-5, Mon-Friday. 25% of your staff are married with children, 50% are single students, and the other 25% are retired but enjoy working part time. Many customers have requested extended evening and weekend hours so you have decided to offer flextime to your staff. You know that some staff are feeling very stressed about the new schedules due to their other commitments. How would you present this change to your three categories of staff? What “perks” will they see from the new “flextime scheduling?”Carmen, your niece, is 16 and your only employee who is under the age of 18. She.

1. Always explain your answers based on what you have learned in
class. Please note that each question has two parts. !
1. Kimberly and Greg purchased a Starbucks in 2014, they
currently have 50 employees. During the employees’ annual
performance evaluations, they notice that their employees are
lacking in certain areas. What can Kimberly and Greg do to
identify their employees’ weaknesses and areas of improvement
(explain)? AND--How could the answer to Part I help their
employees improve their productivity ?
2. Tyler returned from his lunch break to discover that his
supervisor searched through his desk drawers and cabinets. He
is a HR Manager for the federal government. Is Tyler’s
supervisor allowed to search through his desk drawers? Why or
why not? The VP of HR informed your friend Lola, a HR
Coordinator, that the company is launching a new “Let’s Go
Green” initiative. The VP needs Laura to identify three HR
activities that can be done “greener” but without jeopardizing
the quality standards of the HR department. Give three (3)
examples of HR functions that can become part of the “Let’s Go
Green” initiative and explain how each one could benefit the
company in the long run.

2. 3. Your friend works in Providence, Rhode Island and he is
fired at-will for refusing to destroy evidence of corporate
misdeeds. On which basis if any can your friend challenge his
firing? Your friend gets a new job as a security guard in which
he mostly sits around and does nothing. For what reason if any
is your friend’s new job stressful?
4. Bobby, Dana, and Laura purchased a construction company,
Contractors, Inc. in 2015. During a recent employee recognition
event, they overheard some rumors about unionization,
something they have tried to avoid for the past year. One
employee, Miranda, is an undocumented worker but she is
interested in joining a union. Can Miranda legally join a union
and why? Recently, Dana became aware that some of the
employees were caught complaining about pay and working
conditions to one another on Twitter. She reported this to
Bobby and Laura. You have been hired as their HR Consultant.
They would like to terminate these employees ASAP but need to
know if this is legal, please explain how you would respond to
them.
5. You are the owner of a boutique in Hoboken, NJ that employs
25 staff. Your current operating hours are 9-5, Mon-Friday.

3. 25% of your staff are married with children, 50% are single
students, and the other 25% are retired but enjoy working part
time. Many customers have requested extended evening and
weekend hours so you have decided to offer flextime to your
staff. You know that some staff are feeling very stressed about
the new schedules due to their other commitments. How would
you present this change to your three categories of staff? What
“perks” will they see from the new “flextime
scheduling?”Carmen, your niece, is 16 and your only employee
who is under the age of 18. She is saving money to buy a car
and would like to work from Mon-Wed 10am-7pm. She is also
asking to work overtime this summer since she is on break.
How would you respond to Carmen regarding her two requests?
Statement of Investment Policy Continuation of Part one
Due: 05/04/16 at 5 pm
Position: Portfolio Manager, CFA
Firm: Trailblazer Investment Advisors (TIA)
Client: Sam and Amy Kratchman
Date: 04/01/2016
Situation: A potential new client has just been left $1,100,000
(on an after-tax basis) from a wealthy grandparent and is
deciding between your firm and Blackrock Investment in terms
of who will manage their new found wealth. As part of the
process, the client would like you to put together a mock
portfolio, detailing all potential assets to be included in the
portfolio, as well as your forecast of the economy, markets, etc.
and why TIA will provide a higher risk adjusted rate of return
than other managers.
Client: Your clients are Sam and Amy Kratchman both 38 years
old (as of 4/16). They have two children, ages 6 and 4 and two
dogs, Scooby and Shaggy. They would like your help to
refinance their current debt, buy a vacation house, plan for their
retirement at age 65 and pay for a 4-year college education for

4. each of their children.
Historical Savings (assume month-end purchases and
reinvestment):
AIG: Amy started her investing early. Her Dad worked for AIG
and for her 18th birthday (Jan 1996), he bought her 25 shares of
stock. She and Sam were high school sweethearts and after both
finished college, they decided to move to Miami for great
weather and good job opportunities. As a graduation gift (April
2000), Amy’s Dad bought her another 30 shares of AIG and
convinced her to use all other monetary gifts she received to
buy an additional 20 shares. They understood the importance of
saving and continued to invest in AIG over the next several
years as Amy’s Dad felt the Company would continue its pattern
of ongoing success. They bought 50 shares every January (after
college graduation) until the financial crisis (January 2008 last
50 share purchase). In 2008, the stock plunged. Once the
government bailout was in place December 2008, they
purchased 500 shares in January of 2009 and February 2009.
They bought another 100 shares in January 2010. In 2011, the
stock fell below $22 per share and they bought another 200
shares. They seemed to time some of their purchases well, but
overall know they’ve lost money on this position.
Liquid Savings: Sam and Amy both landed great jobs in Miami
after college and via signing bonuses and graduation gifts, they
were able to start saving as they knew they eventually wanted to
get married, start a family and buy a house. Amy’s Dad helped
them to understand the idea of having some safe, liquid money.
They chose to take $5,000 (they both got signing bonuses),
based on a suggestion from Amy’s Dad, and bought 3-month
commercial paper (April 2000) since it offered a higher return
than a typical bank savings account but was safe. After the
initial investment every 3 months they automatically had $500
removed from their paycheck to invest in new 3 month CP.

5. They continued to roll over the principal every period as it
matured increasing their added investment by 25% year over
year (i.e. 2000 $500 per period, 2001 $625 per period, etc.)
They continued this pattern until rates fell below 1%. At that
point, they continued to invest quarterly but kept the additional
contribution constant. After the summer of 2015, they were
concerned about all the market volatility and decided to add
more to their liquid savings. Beginning July 2015, they added
$5000 each quarter to their quarterly investment. The market
has stabilized so they are unsure of their large position in cash
(CP).
Other Holdings: Around the same time they started their liquid
savings, they also read an article by Peter Lynch, whose
investment philosophy was based on “buying what you know.”
As neither Sam nor Amy knew much about investing, they liked
this relatively straight forward approach. Sam worked for
Cablevision Systems (CVC) and believed in the longevity of
cable in the economy. They decided to buy 50 shares. This was
the first investment they had made without the help of Amy’s
Dad and unfortunately soon after purchasing the shares, the dot
com bubble burst and the stock tumbled. In 2002, it was in the
single digits and not really understanding the whole idea of
what a stock in the single digits actually implied, they decided
the stock was really cheap and bought 100 shares each month
the stock price was below $10. Increasing their holdings seemed
to be a good idea, so in 2009 when the stock price dropped
below $14, they bought 100 shares each time and when the
stock again fell below $14 years later, they bought 200 shares
each time.
In 2010, Cablevision spun off Madison Square Garden (MSGN)
and in 2015 Madison Square Garden decided to split up its
entertainment and media division. Because of these
transactions, Sam and Amy became stockholders in both MSG
and MSGN. They love going to Madison Square Garden but are

6. unsure of anything about these Companies.
During the financial crisis, Sam and Amy realized their
investments were not very diversified so decided to buy stock in
another Company they felt they knew well – Apple. Being
heavy users of many of Apple’s products and believing Steven
Jobs had a real vision on the future of this industry, they felt
this was a good investment choice. In March 2009 and 2010
they bought 50 shares. The stock became too expensive and
they held off until the split. In the same month as the split, they
bought 75 shares. Again the stock price started increasing so
when the stock dropped below $100 in 2016, they bought
another 75 shares. Recently they heard a talk on Apple as a
stock investment and are now questioning this holding because
of their lack of new and innovative products.
Real Estate: The couple got married and rather than have a big
wedding, Sam and Amy convinced their parents to give them the
20% down-payment for a house. They bought a $210,000
townhome in Miami in September 2001 and took out a 30 year
mortgage at 6.5%.
By 2006, Sam and Amy decided they really wanted to be closer
to their families in Philadelphia. In February 2006, they sold
their Miami house (assume a 5% sales commission) and moved
to the Philadelphia area where they both got promotions in their
industries. They took the net equity from their sale and added it
to their liquid savings account as they knew they would need
the money to buy another home. During this time, as the real
estate market was a bit questionable, they decided to rent until
things settled down a bit.
After about 4 years, they decided it was time to move into their
own home. In July 2010, they bought a $675,000 home in the
Philly area. They used the equity from the sale of their home as
a down payment on their new home, leaving all interest earned

7. on this amount in their commercial paper account. They took
out a 30 year mortgage at a rate of 5 7/8%. As rates are lower
today, they would like you to refinance their outstanding
principal and reinvest their mortgage savings back into their
investment portfolio. You must calculate the current LTV ratio
on their home. Ratio must be below 70% in order to get the
best rate. They would like you to find the best rate on a 30 year
mortgage and then make extra payments once their second child
is through college such that by the time they retire, all debt is
paid off. They would like to retire by 65 years of age.
Taxes: Assume a 15% capital gains/ dividend rate and 33%
income tax rate. Every time a dividend or interest payment is
received, it is taxed before being reinvested. The same
assumption holds for all asset sales other than real estate. No
taxes are paid on real estate if you are married and the gains are
less than $500,000.
Additional Facts: Currently the family is earning $330,000 per
year (before tax), which more than adequately covers their daily
living expenses and savings.
Sam and Amy want to pay for their children’s college
education. You should assume the children attend college at age
18 and go to a four year institution. College on average,
currently costs $47,250 (private) and $22,800 (state). These
amounts include tuition, room and board. They want you to
plan their future assuming full funding for both children’s
college education. Average annual costs of education are
expected to increase at 3.4% per year for private schools and
2.8% for state schools. In addition, they would like to buy a
vacation house in Florida (as they do miss the warm weather of
Miami) so they can use it all year round and are a lot less
expensive than the Jersey shore. Their price point is about
$400,000-$500,000. If needed, they are willing to rent out the
house for 2-3 months, at the most, during the year. Assume at
least a 20% down payment and finance the remainder.

8. Requirements and Calculations: In reviewing their current
holdings they want you to calculate the average annual and
cumulative rate of return and risk (standard deviation) on each
equity investment they hold throughout their investment
horizon. Given this information and your investment
knowledge, make a determination whether these stocks and
liquid savings still hold a place in their portfolio.
Diversification is very important so from the start, they do not
want more than a 5% position in any one individual stock.
Your clients understand the risk/ return relationship and
therefore do not want their nominal portfolio required return to
exceed 10%, including your fee. Calculate required return
using all the above data as well as added facts listed in excel
requirements.
Overall Review: At the present time, they realize they made
some mistakes with their savings decisions and were really
lucky in others. Nothing about their past decisions have been
consistent and although at times they were careful about putting
money away, at others, they were spending money on vacations,
etc. They are seeking good advice for how to better diversify
and make good informed investment decisions. They are so
grateful to have just been left their inheritance and want to
make sure they utilize their new found wealth to support their
family’s future.
Written Work:
1) Purpose / Objective
a. Introduction of manager and client’s overall portfolio
objectives (completed already)
b. Risk and return of the portfolio

9. c. Assess current holdings including a decision on what they
should do with their investment holdings today. Include any
calculations as well as a basic overview of why this company
belongs or does not belong in their portfolio in your
decision.(EACH COMPANY/HALF PAGE, TOTAL 3
PAGES。AIG,CVC,MSG,MSGN,APPLE,CP)
2) Economic Assessment: Completed already
3) Asset Allocation
a. Graph your allocation and analyze why you chose this
particular distribution
b. Explain how it makes sense given your client’s objectives
and constraints including discussion about correlation and
fundamental reasoning for your decisions（1-2 PAGES)
c. Include your portfolio risk adjusted return versus the overall
market
4) Complete Bibliography
d. Data sources
e. Research sources
Excel Requirement:
Cash Flow Template
1) Retirement: retirement income is the future value on an after
tax inflation adjusted basis. Calculate the average inflation rate
over the last 25 years (September to September). When they
retire they will need about 75% of their current income until age
79. Once at age 80, their travel will be more limited so will
need about 50% of their income. We are assuming their health
care coverage is provided in an ongoing way by their current
employers. Plan for the couple to live to 95 years old (funds can
be left to benefactors, if they should pass before).
2) Calculate full amortization schedules for all mortgages,

10. refinancing, etc. Mortgage rates are available on bankrate.com
keeping in mind that a conventional loan maxes out at $417,000.
Borrowing over that amount must be a jumbo loan. Make sure to
take note of the points you are paying. Most of the time it
makes sense to use zero point mortgages. YOU MUST USE
PRINT SCREEN to source your actual rates. Print directly into
a tab in your excel file.
3) Use appropriate housing indexes for their respective homes
(stated in excel- mortgage tab).
4) If you choose to rent out their vacation home, assume the
income generated must be after-tax and inflation-adjusted.
Must source your assumption for rental income.
5) You must outline all your assumptions from your excel work
and include as an appendix
6) The template provided must be completely filled in. Adding
is fine – Deleting is not.
Asset Allocation Template
1) You need to use the historical average annual risk and return
levels utilizing an appropriate benchmark for large, small and
mid-capitalization domestic stocks, domestic fixed income,
developed and emerging international equities, real estate,
commodities and cash. You are required to invest in domestic
stocks, domestic fixed income, international and cash.
2) The historical data should cover the period 12/30/1995 (20
year time period) to 3/30/2016 and 12/30/2005 – 3/30/16 (10
year time period). Your data should measure total return (not
just price) and all benchmarks must go back to 1995.
3) Asset allocation table must be 100% completed regardless of
what sectors you choose to invest in. You must calculate a
weighted return for your portfolio and make sure that it exceeds
your nominal IRR by at least 25 to 50 basis points.

11. 1