Week 3 Problems

 

1. Complete Worksheet 37 in Focus on Personal Finance, “Your Financial Plan – Evaluating Corporate Bonds,” using the Mergent Bond Viewer database  (You can find this database in the Library Tab. Go to the University Library, and then click “View All Resources Alphabetically.” You will find the Mergent Bond Viewer database there.) or other reliable source for Apple Inc’s bond maturing in 05/13/2045.

1. Explain the principle of asset allocation. Using the Internet or library research, prepare a 2-minute presentation describing why the principle of asset allocation is important when establishing an investment program.

1. Assume you are 59 years old, want to retire in 6 years, and currently have an investment portfolio valued at $550,000 invested in technology stocks. After talking with friends and relatives, you have decided that you have “too many eggs in one basket.” Based on this information, use the asset allocation method described in this chapter and use the following table to diversify your investment portfolio. Then answer the following two questions:

• What are the advantages of asset allocation?

• How could the time your investments have to work for you and your age affect your asset allocation?

What is the recommended asset allocation for this 59 year old person? (Show in the chart below.)

Investment Category (Asset Class)	% Allocated	Comments: What is this asset class expected to contribute to the portfolio?  (i.e.: growth, income, safety, diversification, etc.)
Large-cap stocks
Mid-cap stocks
Small-cap stocks
Foreign stocks
Government bonds
Corporate bonds
Cash
Other investments (specific types e.g. real estate)
Total Allocation  (must = 100%)

(If needed:)

References

APA-formatted citation

 

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