Investment Analysis and Portfolio Management,

Attached is the investment analysis assignment and need to solve it within 6 to 7 hours. the file is the problem and the other is the guidelines for an answer. book name is

  • Investment Analysis and Portfolio Management, 10th ed. By Frank K. Reilly and Keith C. Brown, Thomson South-Western, 2012.

undefinedISBN # 139780538482387

Requirements: writing questions

 

PROBLEMS

  1. We are considering two bonds. One pays 3% and has a maturity of 8 years, while the other pays 4% and has a maturity of 8 years. If we expect rates to fall by 1% from their current level, which is 4%, where should we invest, and what is the total ROR we make for the one versus the other? (Note the first bond drops only .5%, while the second required rate drops by 1%)
  2. We expect the yields of maturity to increase by 1% from their present level. We have a 25 year 8% paying bond with a required rate of 7%. We want to switch to a 4 year 8% bond with a market rate of 6%. What shall we gain if we act on our expectation, and it transpires? If rates instead increase, what will be the result?
  3. We have a debt of $10 million in 15 years. If we want to ascertain that we have enough to meet this debt in 15 years, what year to maturity bonds should we invest in, if they pay 9% annually, and they have a ytm of 4%?

 

ESSAYS

1.Expound on this quote.  “The economy may easily slow down or expand in the next couple of years. The reason is that there are a few optimistic factors, but they’re also are a few pessimistic ones.  Among the positive variables are first, expansionary monetary policy, extremely strong fiscal policy with the stimulus bills passed in the last few months, and a lot of savings, which have not been spent due to the virus. However, there are three key weaknesses. One is the high incidence of the virus and the corollary that people are afraid to spend by going out. The second is the woeful investment in the infrastructure of all sorts, which has occurred in the last four decades. The third is the increase in the last four decades in inequality of income and wealth, which makes the masses, poor and most middle-income people, lose substantial buying power.

 

  1. How do monetary policy and financial variables, generally, affect the economy, the stock and bond markets? Does money determine those markets or is it the other way around according to empirical evidence?

3.Analyze the different indicators we have. You do not need to talk about all the indicators. Mention two of each category of leading, coincidental, and lagging. Compare and contrast the 3 types.

  1. Elucidate the factors influencing the four components of the GDP. What are the key sub-components of the components? Describe how important each component is and why.
  2. Talk about real investment, as a component of GDP. What factors influence the components that compose it? What influences those components?
  3. There are a few tools we have to predict the consumption part of GDP. A few of them are consumer sentiment and consumer confidence. Talk about the advantages and disadvantages of those tools, as well as their function.

RUBRIC 4 PORTFOLIO

 

PROBLEMS

  1. In this problem, you need to address the fact that one bond drops by less of a yield than the other. This has implications about the expected profitability of the two instruments.
  2. Our shift requires an analysis of the determinants of duration.
  3. This is an immunization problem.

ESSAYS

1 You need to argue both sides.  The reasons you give are the essence of the problem.

  1. There is evidence that the relationship between money and the financial markets are bi-directional.
  2. Discuss the benefits and costs of indicators and mention 2 in each category.
  3. Define the GDP identity. List their subcomponents
  4. Elaborate on the 3 subcomponents of real I, and talk about their determinants.
  5. How do we use consumer sentiment and confidence? What are advantages and disadvantages?

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