...know what the interest rates are on those so accounting for the life span of the loan I was able to calculate what rate of return would be needed to go with an investment as opposed to just paying off current debts. On top of debts, my situation warrants setting aside a portion of the inheritance to purchase a home. I am not a home owner and I figured the best thing to do with about 25% of the inheritance would be to purchase a home and have something in my name with little to no mortgage payments would be in my best interest. The remainder of the money would open to be invested. Investment Goals: Possibly the biggest investment goal that I have would be to secure a financially stable retirement. All of the transactions are in an attempt to grow the portfolio more and more before that time. Ideally, the account would reach a point to where I would have the option to go with safe, fixed income investments through retirement and be comfortable. Depending on the success of the portfolio it wouldn't be out of the question to retire before the age of 65. Growth stocks early on before moving to more conservative type securities. Another goal is to provide a college fund for my future children to pay for most, if not all, of their higher education expenses. Educational expenses rise at an alarming rate. Finding some investments that are able to keep up with or beat the college inflation rate was one of the strategies to meet this goal. Other than those main goals the other goal I have...
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...------------------------------------------------- What are stocks? Stocks are shares of ownership in a corporation. The stock market is a place where stocks are bought and sold. The Philippine Stock Exchange (PSE) is the corporation that governs our local stock market. People buy or invest in stocks to benefit from a company's tremendous value potential over time. Once you buy or invest into a stock you now become part owner or a shareholder of that particular corporation. Download the latest PSE Information Primer ›› ------------------------------------------------- How to make money in stocks? As a Shareholder, you can now participate in the company's growth and success through stock Price Appreciation and by earnings Dividends. Capital or price appreciation is an increase in the market price of your stock over time brought about by an increase in its potential value and the demand to buy its shares. The faster a company can grow, the faster its price can appreciate. Profitable corporations can also issue dividends, whether in cash or in additional shares of stock as a means for shareholders to share in their distributed profits. Top ›› ------------------------------------------------- Why Invest in the Stock Market? History has proven that investing in quality stocks can provide greater returns than most investment instruments. This offers you the best chance in achieving your financial goals and gives you the ability to later enjoy the benefits of your...
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...You work for a large investment firm and recently wrote a position article on your firm's approach to investing for the small investor, titled "Investing Is for the Little Guy." The article now appears on your company's Web site. It has, interestingly enough, generated e-mail responses from potential clients, and your firm is asking you to address some of their questions for a Frequently Asked Questions (FAQ) segment that will be posted to the Web site soon. Specifically, some of the respondents have compared investing in the stock market as a no-win situation, and only the institutional investors can win. These respondents would like a response that further clarifies your firm's position regarding risk in light of these types of statements. Research stock market investments using your text, course materials, and Web resources. What disadvantages do small investors face when investing in the stock market? What advantages are presented to these small investors? Post a new topic to the Discussion Board that contains your answers to the above questions. Respond to 2 other students' posts on the Discussion Board that critiques their answers. I work for a large investment firm and recently wrote a position article on the firm's approach to investing for small investors. It has generated e-mail responses from potential clients and my firm is asking me to address some of their questions. Some of the respondents have compared investing in the stock market as a no-win situation...
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...Fidelity Large Cap Stock Fund and S&P 500 are similar funds. These two funds heavily invest in large market capitalization company common stock, topping 80% of its entire portfolio. Fidelity Large Cap Stock Fund consists of normally 11 different sectors for equities listed in highest portfolio weight with first five sectors making 80% of the portfolio: • Financials • Information Technology • Health Care • Energy • Industrials • Consumer Discretionary • Consumer Staples • Telecommunication Services • Materials • Utilities • Other Current year-to-date performance of the Fidelity Large Cap Stock Fund (FLCSX) was overall positive at 16.24% year-to-date return. The financial sector contributed and played a big part in making the successful performance this year resulting from a good portfolio mixture of securities and its positive gain. This mixture consists of some of the high return securities such as; JPMorgan Chase, MetLife and Charles Schwab returning, 29.38%, 48.68% and 54.99% respectively. The historic performance has shown that both MetLife and Charles Schwab performed well responding to the rising interest rates, and these two companies did not fail to positively react to the recent increase in interest rates. Both companies’ share price went up by more than 20%. Thanks to the uptick in interest rates due to many speculation of slow economy recovery in the market. S&P 500 also had a strong year-to-date return at 13.82%. Both FLCSX and S&P 500 topped...
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...Stock Trak Investment Report [Portfolio Investment Analysis] Portfolio management is an important factor that determines the performance of the portfolio. To perform well in the portfolio, it is not only essential to develop personal investment strategies, but analyzing current financial trend is also vital. Stock Trak is an online portfolio simulation that allows students to try out different investment strategies, and also get a hand on experience in what the real market trading conditions are. By managing the portfolio, I have acquired some new knowledge of investment strategies and also become more familiar with the current market by following closely to the financial headlines. My portfolio composed of only a few specific stocks of some large information technology companies. The main compositions are Apple Inc., Google Inc., and International Business Machines Corp (IBM). By investing different stocks in the same industry, it comes to my attention that even though they are in the similar category, the life cycles of these stocks are still very different. It is interesting to compare and analyze the different progress of those companies, and also to see how different factors affecting the performance of a specific stock and the portfolio as a whole. [Portfolio Performance Analysis] My overall return is 7.92%, which is about average and is a little over performed comparing to the S&P 500 average of 7.71% during the same period of time. Analyzing the historical data...
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...STOCK INVESTMENT REPORT Prepared by: A. Smith Date: 07/04/2011 Industry Overview McDonalds Corporation (NYSE : MCD) is an American industry that is undoubtedly the world's leading fast-food service organization. Since its incorporation in 1955, McDonald's Corporation has spanned its services over 119 countries in 6 continents. About 80% of the restaurants are run by franchisees or through joint ventures with local business-people. The popular chain is well known for its Big Macs, Quarter Pounders, and Chicken McNuggets as well as more recent additions in response to changing customer palates - salads, wraps and smoothies. Helped by these new menu offers and the Mc Café line-up, the company, as of March 31, 2011, posted revenues that were 2% higher than the last quarter. According to Thomson Reuters, McDonald's reported sales rose to $6.21 billion from $5.97 billion in 2010. That’s an increase of (6.21/5.97) – 1 = 76% in revenue – that’s how fast the company’s expanding! Analyzing Industry Strengths and Weaknesses As investors (current or future), this will help us identify trends in order to gauge revenue growth over time. Other tools that help develop information about the past so that it can be used to get a handle on the future are financial ratios. Financial ratios are a valuable and easy way to interpret the numbers found in statements. It can help to answer critical questions such as whether the business is carrying excess debt or inventory, whether...
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...pricing model (CAPM) will allow you to determine the required rate of return for any risky asset Assumptions of Capital Market Theory 1. All investors are Markowitz efficient investors who want to target points on the efficient frontier. Assumptions of Capital Market Theory 2. Investors can borrow or lend any amount of money at the risk-free rate of return (RFR). Assumptions of Capital Market Theory 3. All investors have homogeneous expectations; that is, they estimate identical probability distributions for future rates of return. Assumptions of Capital Market Theory 4. All investors have the same one-period time horizon such as one-month, six months, or one year. Assumptions of Capital Market Theory 5. All investments are infinitely divisible, which means that it is possible to buy or sell fractional shares of any asset or portfolio. Assumptions of Capital Market Theory 6. There are no taxes or transaction costs involved in buying or selling assets. Assumptions of Capital Market Theory 7. There is no inflation or any change in interest rates, or inflation is fully anticipated. Assumptions of Capital Market Theory 8. Capital markets are in equilibrium. Risk-Free Asset • • • • An asset with zero standard deviation Zero correlation with all other risky assets Provides the risk-free rate of return (RFR) Will lie on the vertical axis of a portfolio graph Covariance with a Risk-Free Asset Covariance between two sets of returns is...
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...Investment Basics Stephanie M. Council Professor Bartorillo Investments – FIN 320 July 22, 2011 We will discuss the investment process, describe and evaluate four investments for consideration in any investment portfolio. These four investment considerations are bonds (corporate and municipal), stocks (commom and preferred), mutual funds and derivatives. We will analye the risk and return issues associated with each for a portfolio. Finally, we will provide rationale for each of the portfolio selections. The investment process is an investor’s portfolio of his or her assets. We know assets are “anything tanible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value” (“Assets,”). As the portfolio is established, it starts to update once the investor begins to sell securities, buy securities and get additional funds to increase the size of its portfolio. However, investors do sell securities to decrease their portfolio. There are a few key points an investor should note when making investments. One should always create a portfolio based on asset classes which have long term up trends. Secondly, an investor should not buy investments at random and believing for the best. Thirdly, the investor should always monitor the funds. This can be done quarterly to optimize returns on their holdings, returns rankings and etc… Finally, but nottheless, an investor should utilize monitioring organizations...
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...portfolio manager for the XYZ investment fund. The objective for the fund is to maximize your portfolio returns from the investments on four alternatives. The investments include (1) stocks, (2) real estate, (3) bonds, and (4) certificate of deposit (CD). Your total investment portfolio is $1,000,000. Investment Returns Based on the returns from the past five years, you concluded that the investment annual returns on stocks are 10%, on real estates are 7% on bonds are 4% and on CD is 1%. Risk Constraints However, you also have to analyze the risks associate with each investment category. A wildly used risk measurement parameter is called Value at Risk (VaR). (Note: VaR measures the risk of loss on a specific portfolio of financial assets.) For example, given a million dollar stock investment, if a portfolio of stocks has a one-day 4% VaR, there is a 5% probability that the stock portfolio will fall in value by more than 1,000,000 * 0.04 = $40,000 over a one day period. In the portfolio, the VaR for stock investments is 6%. Similarly, the VaR for real estate investment is 2% and the VaR for bond investment is 1% and the VaR for investment in CD is 0%. To manage the portfolio, you decided that at 5% probability, your VaR for stocks cannot exceed $25,000, VaR for real estate cannot exceed $15,000, VaR for bonds cannot exceed $2,500 and the VaR for CD investment is $0. Diversification and Liquidity Constraints As a diversified investment portfolio, you also decided...
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...The Blue Chip Investment Company FIN510A - Finance The Blue Chip Investment Company - Team Members: Pragadeshwara Raja Chinnapan (Prag) – Chief Investment Officer (CIO) Soumyonil Bose (Neil) – Chief Executive Officer Archana Gondi - Chief Financial Officer Shalini Suresh - Chief Operating Officer Eric Gunho Bae - Chief Risk Analyst The Blue Chip Investment Company Blue Chip Investment Company is a stock management firm that aims to produce superior investment returns by aggressively seeking capital appreciation in rising markets. The Blue Chip investment Corp. was founded by Eller MBA’s Prag, Neil, Archana, Shalini, Eric with an initial investment of $250,000 from each stakeholder. We endeavor to maintain a portfolio of stocks that generates high profits over a short period of time for the stakeholders. Our goal is to maximize stakeholder wealth by making opportunistic short-term investments based on proactive investment research and a disciplined strategy. Our Strategy Our company’s short term strategy is to invest in US Retail industry’s top performing stocks. We are specifically targeting the high retail stock returns during this US holiday season. The US Retail Industry The National Retail Federation (NRF) estimates that U.S. retail sales will rise 3.9% during this holiday season, overshadowing last year’s growth of 3.5%. Sales during the months of November and December are estimated at $602.1 billion. NRF also forecasts a 13%-15% rise in online holiday sales to $82...
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...return from holding an investment over some period of time is simply any cash payments received due to ownership, plus the change in market price usually expressed as a percent of the beginning market price of the investment. Return comes to you mainly from two sources – income or dividend plus any price appreciation (capital gain or loss) Dt + ( Pt – Pt-1) R = Pt-1 Suppose, you buy for Tk. 100 a security that would pay Tk. 7 in cash to you and be worth Tk. 106 one year later. This return would be (7 +6)/ 100 = 13%. Risk can be defined as the variability of return from those that are expected. In financial decisions it is often helpful to have an objective measure of risk. The main reason for having measuring of risk is to enable us to make better decisions. To be useful, a risk measure should enable us to rank alternative risky ventures. If there are two possibilities being analyzed, A and B, it is often important to know whether A is riskier than B or not. A good measure of risk should also tell us how much more risky A is than B. Is A twice as risky or ten times as risky as B? Is risky at all? Risk measurement procedures are usually based on a particular method of organizing financial problem -through probability distribution. (A set of possible values that a random variable can assume and their associated probabilities of occurrence.) Suppose you are thinking about purchasing stock A, which has a current price...
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...find suitable people to help her develop a preliminary offering of her baby food. The new baby food was received well in a small-scale study. Thereafter, Julia and her team needed to raise funds. They considered three options: corporate bonds, preferred stock, and common stock. The financial characteristics of potential investors, the return rates for each option, the market, and the future inflation rate were all evaluated regarding impact on getting the company off the ground. This case study evaluation will serve to discuss the potential investment into Starting Right Corporation by others with varying perceptions of the possible success of the business. The development of legal documentation for the business and investment alternatives for parties who are risk-averse and risk-seekers will also be discussed herein. Sue Pansky, a retired elementary school teacher, is considering investing in Starting Right. She is very conservative and is a risk avoider. What do you recommend? Since Sue is cautious about change or innovation and wants to limit her exposure to loss, I would recommend that she evaluate her options and determine the possible outcomes to any potential decision she makes about opting in to investment in Julia’s baby food company. One way this can be done is to take a comprehensive view of the details and develop a measurement tool that will show the worst and best potential...
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...(Gitman/Joehnk/Smart) Chapter 1 The Investment Environment 1.1 Learning Goal 1 1) Since 1900, the average annual return on savings accounts has been higher than the return on stocks. Answer: FALSE Question Status: New Question Learning Goal: Learning Goal 1 2) Land and buildings are examples of real property investments. Answer: TRUE Question Status: New Question Learning Goal: Learning Goal 1 3) Almost half of Americans own stock or stock mutual funds. Answer: TRUE Question Status: Previous Edition Learning Goal: Learning Goal 1 4) A Unites States Savings Bond is an example of an investment as defined in the text. Answer: TRUE Question Status: Previous Edition Learning Goal: Learning Goal 1 5) An example of a direct investment is the purchase of mutual fund shares. Answer: FALSE Question Status: Previous Edition Learning Goal: Learning Goal 1 6) Which of the following is an investment as defined in the text. A) Automobile insurance B) A new automobile C) A United States Saving Bond D) All of the above Answer: C Question Status: Previous Edition Learning Goal: Learning Goal 1 7) Stocks are a(n) ________ investment representing ________ of a business. A) direct; ownership B) direct; debt C) indirect; ownership D) indirect; debt Answer: A Question Status: Previous Edition Learning Goal: Learning Goal 1 8) Which of the following is an indirect investment? A) Stocks in foreign companies B) U.S. savings...
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...Case Study 1 NPV: Of all the investment appraisal methods, NPV is often argued to be the most superior. This is because it takes into account the time value of money. The method assumes that a dollar today is worth more than a dollar this time next year. It works under the assumption that if one is owed a dollar and the borrower offers a choice of either giving the dollar now or in a year’s time, the more rational option for the lender is to take the dollar now. Provided the lender does not keep the dollar under his mattress at home, it will be worth more than a dollar in a year’s time. It stresses that future cash flows should be expressed in terms of what they are worth now when cash is expended on the project. The present values of these future cash flows can then be compared with what we are spending now on the project. When present values of cash outflows and inflows are compared, if the result gives a positive NPV, then the project should be recommended. In a mutually exclusive situation, that is, when you can only undertake one project and not two projects at the same time, if two projects were to give positive NPVs, then the project with the higher NPV is the one to recommend. In case of Goodweek tires, Inc. we would only consider the relevant costs and not the sunk costs. The sunk costs would represent costs that would have been incurred regardless of what decision would be taken. These are the initial market study costs etc. The NPV of the project is negative...
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...XYZ investment fund. The objective for the fund is to maximize your portfolio returns from the investments on four alternatives. The investments include (1) stocks, (2) real estate, (3) bonds, and (4) certificate of deposit (CD). Your total investment portfolio is $1,000,000. Investment Return Based on the returns from the past five years, you concluded that the investment annual returns on stocks are 10%, on real estates are 7% on bonds are 4% and on CD is 1%. Risk Constraints However, you also have to analyze the risks associate with each investment category. A wildly used risk measurement parameter is called Value at Risk (VaR). (Note: VaR measures the risk of loss on a specific portfolio of financial assets.) For example, given a million dollar stock investment, if a portfolio of stocks has a one-day 4% VaR, there is a 5% probability that the stock portfolio will fall in value by more than 1,000,000 * 0.004 = $4,000 over a one day period. In the portfolio, the VaR for stock investments is 6%. Similarly, the VaR for real estate investment is 2% and the VaR for bond investment is 1% and the VaR for investment in CD is 0%. To manage the portfolio, you decided that at 5% probability, your VaR for stocks cannot exceed $25,000, VaR for real estate cannot exceed $15,000, VaR for bonds cannot exceed $2,500 and the VaR for CD investment is $0. Diversification and Liquidity Constraints As a diversified investment portfolio, you also decided that each investment category...
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