Delegated Portfolio Management

By pursuing this, the manager (agent) also pursues the goals of the shareholders (principals). At least that is the idea behind it.

This manual is an introduction and primer to the Commercial Lien Strategy. It does not pretend to be the final word on the subject. The authors and editors have synthesized material from several sources. We have organized it into a form that should be comprehensible to the average reader.

Agency Problem: “The difficulties that arise when a principal hires an agent and cannot fully monitor the agent’s actions.” (Cornett, Adair, & Nofsinger, 2016, p. 15).

Mr. Alexander is new to the property management arena and has no experience with multi-family dwellings. Due to our clients limited capital he cannot afford to hire a property manager. Because Mr. Alexander will also be working his normal full-time job, and doing the property management as a ‘side-job’ the ability to manage multiple subcontractors will be highly inefficient and could lead to disgruntled tenants and higher vacancy rates.

Though possible, it is incredibly hard to imagine that the stars would align so perfectly that all the aforementioned conditions are met as forecasted and result in triumph. It seems much more likely that some unforeseen incident will paralyze the process, creating a rippling effect that throws off virtually all of Alexander’s predictions. For example, a delay in the closing process would delay construction, delaying when tenants can move in and therefore when income can start being generated, and so on. The plan is contingent upon virtually incident-free operation that is somehow achieved under the direction of an amateur- this is fundamentally flawed. As such, I believe Alexander’s proposal is far too deficient in and of itself to be used as a viable plan.

some initial work estimating the likely relationship between what tenants would be willing to pay

While I was researching relevant information, I was also thinking on the other side. Even if he was a dim-witted buyer, he was still responsible for any partnership agreement that he entered. This assignment reminded my past experience when I signed a paper without reading the agreement. I rented an apartment with roommate. Before the end of my contract, my mate moved out. My landlord told me that it was my responsible to find a new roommate.

This paper will seek to provide an overview of the real estate process and its affects on the real estate agent. An agent needs to be knowledgable about the steps required to make a sale, and the risks involved when the sale does not go as planned. Real estate sales require much of the agent, including sacrifices in their personal lives and in their financial stability. Agents must be teachable and willing to seek to see others succeed. A successful real estate sale consists of many steps, sacrifices to personal time, and an agent’s ability to work well with others while remaining incredibly flexible.

Definition: In an active portfolio strategy, a manager uses financial and economic indicators along with various other tools to forecast the market and achieve higher gains than a buy-and-hold (passive) portfolio.

Portfolio and project management are similar and sometimes thought of as being one another. Between the project and portfolio management the goals and the intended strategic action is similar. The process between the portfolio management includes and involves the resources that list a process, which includes the evaluation, selection, and prioritization. Portfolio management and strategic management assist with the organizations missions and goals. These lay out the objective in the continuous planning and monitoring that assist with reaching the goals.

UNIVERSITY OF ILLINOIS AT CHICAGO Liautaud Graduate School of Business Department of Finance Professor Hsiu-lang Chen 1 Practice Problem I

Project Portfolio Management (PPM) is the centralized management of the processes, methods, and technologies used by project managers and project management offices (PMOs) to analyze and collectively manage current or proposed projects based on numerous key characteristics.

According to the CAPM model:R_i=α+βR_m+ε, α represent the abnormal return gained by the portfolio. If the market is efficiency, the α has to be zero.

Agency issues arise when one party (principal) gives another party (agent) an authority to act on his behalf. In this context, the principal is the investor while the professional hedge fund

1. Assume that at retirement you have accumulated $825,000 in a variable annuity contract. The assumed investment return is 5.5% and your life expectancy is 18 years. What is the hypothetical constant benefit payment?