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Investment Vehicles and Techniques

Randy has just been hired as the chief investment officer of a large regional bank. As part of his new role, he has been asked to identify some different investment techniques and strategies that the bank could use to lure in new customers in the current market. The current market is one where interest rates are falling, and the stock market has been seeing a positive trend moving upward for some time. The bank's typical customer mix falls in the 45-65 age range.

Taking the customer mix, current market trends, and Randy's task at hand, describe what investment vehicles and techniques you might use to develop an ideal investment pool in which to target the bank's customer base of potential investors?

- Please indicate what type of risk and return you would expect to make, given the trends in the market and interest rate situation with this asset pool.
- What type of asset mix would you build, given this scenario?
- How would your asset mix change if interest rates started to rise? Why?
- How would your asset mix change if the stock market began to decline? Why?

Solution Preview

Taking the customer mix, current market trends, and Randy's task at hand, describe what investment vehicles and techniques you might use to develop an ideal investment pool in which to target the bank's customer base of potential investors?

The customer mix that Randy has been targeting is one that can be attracted with high rate of returns with a relatively low rate of risk. The current market trends show that the stock market is moving up and the interest rates are declining. In such a market the investment vehicles used by me will stocks, annuities, and mutual funds. There is a greater degree of risk in investing in stocks; however, the declining rates of interest make other investment vehicles less attractive from the point of view of returns. The technique used will be of diversification. The investments in stock will play an ...

Solution Summary

Developing an ideal investment pool is explained in a structured manner in this response. The answer includes references used.

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