Economics Homework Help
Finance Question
PART A
You are a newly hired financial advisor at a money management firm. You have been asked to help create a bond portfolio for one of the firm’s clients. This client is 52 years old, has no debt, and has significant assets under management with the firm. The client has allocated 2% portion of their assets for individual bond investing. This segment of the portfolio is held in the client’s retirement accounts, and the client expects to retire at age 65. The client has an average risk tolerance. Within this bond portfolio, the client has asked the firm to propose eight bonds for this fixed-income investment portfolio.
Select one corporate bond for each of the categories listed below, for a total of eight bonds. In general, choose bonds that you would be interested in purchasing, or that you believe an average investor would be interested in purchasing. Note that some of the bonds may qualify in more than one category; however, you must pick eight different bonds (eight different companies as well) in total.
Categories:
Convertible
Non-convertible
Credit rating – any investment grade
Credit rating – any non-investment grade (e.g., junk or high-yield)
Maturity – maturity within 10 years
Maturity – longer than 10 years
Callable
Puttable
To complete this assignment please provide a table (list) of all eight bonds according to the categories above, including the following:
Issuer name
Convertible or non-convertible
Coupon
Maturity date
Credit rating – S&P
Last price – sale
Last price – yield
If the bond is callable
If the bond is puttable
FOR PART A I HAVE ALREADY CHOSEN THE BONDS. PLEASE COMPLETE THE TABLE FOR THE BONDS LISTED BELOW AND FILL IN THE COMPLETE LIST OF INFORMATION REQUESTED ABVOVE.
Convertible
SCHW4836967
Yes
Corporate Bond
Non-Convertible
XOM4218990
Yes
Corporate Bond
Credit rating – any investment grade
AAPL4208639
Yes
Corporate Bond
Credit rating – any non-investment grade (e.g., junk or high-yield)
RCL4568009
Yes
Corporate Bond
Maturity – Maturity within 10 years
JPM4203227
Yes
Corporate Bond
Maturity – Maturity more than 10 days
CAT4884921
Yes
Corporate Bond
Callable
INTC4914060
Yes
Corporate Bond
Puttable
KEY.KO
No
Corporate Bond
NEXT choose one of the bonds. Download and review the prospectus for your chosen bond. Include in the response :
An illustration of the scheduled cash flows for your chosen bond.
A brief list of the affirmative covenants in the indenture of your chosen bond.
A description of any specific contingency features of your chosen bond (put, call, conversion features, etc.).
Propose two reasons an investor would purchase this bond.
Attach the prospectus for your chosen bond to your discussion post.
PART B
Please review the video located at https://www.finra.org/investors/market-data-center-bonds-guide and review the attached PDF as a guidance. Also visit the FINRA website and conduct a search for one additional bond. Choose one type of bond from one of the categories below:
Non-sovereign government bonds (e.g., bonds issued by U.S. states and cities)
Quasi-government bonds (e.g., Fannie Mae, Freddie Mac, etc.)
Once you have chosen your bond, download the prospectus and review it.
In your post, compare your chosen bond to a similar maturity U.S. sovereign bond (e.g., U.S. treasury note fixed or floating rate). To select a similar maturity sovereign bond, you can search on the FINRA website, click on “Government,” and use the advanced search to choose U.S. treasury bills, notes, or bonds. You can also find government bonds by visiting the Wall Street Journal Market Data Center. Be sure to discuss the following in your comparison:
Rating
Cash flow
Security/collateral
Current yield
Conversion features
Put/Call features
Other unique features
Two reasons investors would choose this bond for inclusion in a fixed-income portfolio
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