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HRMT208 Assignment 3

Weight: 25% of your final grade

Due: After completing Unit 3

Note: Assignment 3 has a total of 100 marks

Instructions: Answer all questions in complete sentences; be thorough but concise. Use your own words and, where applicable, cite any references appropriately, including page numbers. Upload your completed assignment as a Word document on the Assignment 3 submission page. If you encounter difficulties preparing this assignment, contact your Academic Expert through the Student Support Centre.

Part A – Short Answer (30 marks)

1. Concerning Canadian equities, your readings identify many different stock classifications. Find a Canadian company that you believe is an example of the following types of stock (you may need to do online research to find company names) and explain why it fits this description. Be clear and specific, and support your selection by demonstrating what the definition of each type is. (5 marks each)

a. Blue chip stock

b. Cyclical stock

c. Speculative stock

d. Small cap stock

2. If you were investing your own retirement money, which asset class(es) would you invest in, and why? How does this relate to the concept of diversification? Explain how diversification works using knowledge and information from the course materials. (10 marks)

Part B – Application (30 marks)

The questions below are based on the Carleton University SIPP:

https://carleton.ca/pfm/wp-content/uploads/sites/9/SIPP-2023-June-30-Website.pdf   

Read through the document. Prepare a short answer (from one line to one paragraph maximum) for each of the following questions. Answer in your own words, where possible. Support each answer with the relevant page and section numbers from the SIPP.

1. Explain and discuss what the purpose of this SIPP is. (5 marks)

2. What are the minimum, maximum, and benchmark allocations to the Canadian Equities asset class in the SIPP? Why do you think these ranges exist? (5 marks)

3. The reading assignment for Unit 3 identifies different asset classes and categories of investments, including equities and fixed income, alternative investments, etc. Which asset classes does the Carleton Pension plan invest in? (5 marks)

4. Explain, specifically and clearly, why you believe the plan has chosen to invest in several different asset classes rather than investing in only one type. Is this different from the asset mix you chose for your own retirement in Part A? Discuss why/why not. (10 marks)

5. What, specifically, is the plan’s “rate of return” expectation? Hint: this will require that you read all of Section 4 of the SIPP. (5 marks)

Part C – Critical Thinking (40 marks)

The reading assignments for this unit discussed Environmental, Social, and Governance (ESG) issues as they relate to pension investments. This part of the assignment asks you to apply this knowledge to a hypothetical situation.

Background

Assume you are a member of a pension investment committee. The committee has heard that “ESG” is an important concept for Canadian pension plans to understand. You have been asked to make a presentation on this topic at the next meeting of the committee.

Task

Prepare a short report to circulate to the committee prior to the meeting that summarizes your presentation. The report should include, at a minimum, the following:

1. Explain what is meant by ESG investing in the context of pension plan investment policies.

2. Identify the legislative/legal issues related to the inclusion of ESG factors in the investment policies of the pension plan.

3. Describe at least two different “types” of ESG investing (i.e., methods to implement ESG) in a pension plan.

4. Discuss the reasons why pension plans are moving toward implementing ESG in their investment policies.

5. Make a recommendation to the committee on what type, if any, of ESG investment policy it should pursue and why.

Guidelines

You will only be given a few minutes to present your views to the committee, as the meeting schedule is always very limited. Keep these guidelines in mind as you prepare your report:

· Write in your own words and cite supporting materials appropriately.

· You are encouraged but not required to conduct additional research, especially the optional readings in the course materials.

· Be professional and respectful in your writing and use appropriate organization and formatting. It should be clear in your answer which parts of the question you are dealing with.

· Suggested word count is approximately 1000 words.