financial instruments 3 sections

Part 1

You need to present to your client, Alice Cartwright, the pros and cons of 3 different investments that are available to the average investor. The 3 types of investments that you chose for her first investment are as follows:

  • Bonds
  • Common stock
  • Mutual funds

In a PowerPoint presentation of 8 to 10 slides, provide your client with an overview of each of these types of investments. The presentation should be concise so that it does not overwhelm her.

part 2

You need to present to your client, Alice Cartwright, some investment options for her to choose from. Her choices are between the following 2 bonds:

Bond

Description

Face Value

Coupon Rate

Years to Maturity

Bond A

corporate bond in ABA company

$1,000

10% coupon

12 years, paying annual payments

Bond B

corporate bond in ABA company

$1,000

10% coupon

2 years, paying annual payments

For each bond, answer the following questions:

  • What is the valuation of the bond if the market interest rates are 12%?
  • What is the valuation of the bond if the market interest rates are 6%?
  • What is the valuation of the bond if the market interest rates are 2%?
  • What is the value of the bond at the present time?
  • What will the bond be worth at maturity?
  • Are there differences in bond prices? If so, explain why.

Part 3

You decide to show Alice Cartwright how beta affects the volatility of stocks. You need to go out and find 5 stocks in which you think Alice might have investment interest.

Complete the following for this assignment:

  • Identify the stocks in which you would have Alice invest.
    • Make sure each stock has a different beta.
  • Either track the stocks for 4 days, or use historical data to monitor price fluctuations in the market price.
  • Comment on the price changes relative to the beta.
  • Discuss other items that could affect the stock price.

 
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