10/23/24, 12:57 PM Chapter 6 and 8 Exercise
FIL 242 - Chapter 6 and 8 Exercise:
Jane (age 24) is an accountant in Chicago, and is working on building a nest egg large enough to
retire when she is 50. Her goal is to retire to Queretaro, MX. She is hesitant to put money in her
portfolio when markets are down, and feels uneasy about markets being in bear market territory.
Normally Jane believes in timing the market, and trying to purchase a large position in one or
two undervalued securities, hoping the securities will increase in value. She makes her buy and sell
decisions by viewing charts, as well as past price movements of potential stocks to purchase. In the past,
she has noticed the small cap portion of her portfolio has performed better than the other asset classes
in her portfolio, which makes her want to invest more in small cap securities. As your friend, she comes
to you with some key questions.
Key Questions:
• How would you describe her unwillingness to invest when markets are down? What
concepts that we have discussed in class may explain this. Risk averse,
• What market anomaly explains why the small cap po rtion did better in her portfolio?
• Would you classify Jane as an active or passive investor? active
• What type of analysis does Jane participate in?
• What methods or theories might help Jane achieve more sustained long-term success along
her investment journey?
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FIL 242 - Chapter 6 and 8 Exercise:
Jane (age 24) is an accountant in Chicago, and is working on building a nest egg large enough to
retire when she is 50. Her goal is to retire to Queretaro, MX. She is hesitant to put money in her
portfolio when markets are down, and feels uneasy about markets being in bear market territory.
Normally Jane believes in timing the market, and trying to purchase a large position in one or
two undervalued securities, hoping the securities will increase in value. She makes her buy and sell
decisions by viewing charts, as well as past price movements of potential stocks to purchase. In the past,
she has noticed the small cap portion of her portfolio has performed better than the other asset classes
in her portfolio, which makes her want to invest more in small cap securities. As your friend, she comes
to you with some key questions.
Key Questions:
• How would you describe her unwillingness to invest when markets are down? What
concepts that we have discussed in class may explain this. Risk averse,
• What market anomaly explains why the small cap po rtion did better in her portfolio?
• Would you classify Jane as an active or passive investor? active
• What type of analysis does Jane participate in?
• What methods or theories might help Jane achieve more sustained long-term success along
her investment journey?
about:blank 1/1
