Equity Analyst Project:
Asset Allocation ExercisePurpose
To enable the student to demonstrate proficiency in the first stage of a top-down, three-stage valuation analysis: analysis of investment prospects in the U.S. macroeconomy.
This individual assignment involves an analysis of general economic conditions or systematic risk, i.e., the risk that affects all industries and companies, in the U.S. macroeconomy.
You will be asked to determine in percentage terms an optimal allocation of $1,000,000 among the following three asset classes: U.S. equities, U.S. Treasury bonds, and cash. The goal is to maximize your expected return over the next 12 months. A one to two page business brief is needed providing your analysis of the asset classes’ prospects and your justification of your allocation among them.