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Submit a written paper which is 2 pages in length, exclusive of the reference page. Papers should be double-spaced in Times New Roman (or its equivalent) font which is no greater than 12 points in...

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Submit a written paper which is 2 pages in length, exclusive of the reference page. Papers should be double-spaced in Times New Roman (or its equivalent) font which is no greater than 12 points in size. The paper should cite at least one source independent of the textbook.

In this paper, please discuss the following case study. In doing so, explain your approach to the problem, support your approach with references, and execute your approach. Provide an answer to the case study’s question with a recommendation.

A friend has confided in you that they have recently inherited a moderately sized investment portfolio from a relative. They don’t know what do with the assets, if anything. The friend comes to you for advice. Your immediate advice, of course, is for your friend to seek professional advice from a tax expert as well as a financial adviser. Your friend persists, however, and asks how the investment returns of the portfolio compare to other investments. You agree to review the portfolio and calculate the yields of each investment as well as determine the weighted average yield for the entire portfolio.

In this paper, refer to the investment schedule that is available to downloadhere. For your quantitative analysis compute the current market value of each security position of the portfolio, calculate individual yields based on current market pricing, and determine the weighted average factor and the weighted average yields.

  • Explain the basis upon which you determined the weighted average yield.
  • Explain the difference between a yield that is based on cost, as opposed to one that is based on current market value. What would be the different uses of both?
  • What non-quantitative observations can you make about the portfolio?
Answered 14 days AfterDec 10, 2017

Solution

David answered on Dec 24 2017
27 Votes
Estimation of the Weighted Average Yield:
To calculate the weighted average yield we have to calculate the weighted average factor. Following steps follows to find the weighted average yield:
· Step 1: We product the estimated cu
ent yield into the cu
ent market price of the stocks in the portfolio to find the weighted average factor.
Like:
For Altria: 4.13% * (50.20*119)
· Step 2: Add the per weight factors together to the find the total weight factors of the dividend in the portfolio it comes to the total of $1,685
· Step 3: Add the all portfolio value of the stocks to find the total value of portfolio
· Step4: Divide the total weight factor from the total value of portfolio for all of the stocks. Which provide the total weighted average yield as $1,685
    Company Name
    Portfolio Position (# of shares)
    Cu
ent Market Price
    Cu
ent Market Value
    Estimated Dividend/Interest
    Estimated Cu
ent Yield
    Weighted Average Facto
    Weighted Average...
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