+1 862 207 3288 Fixed Income portfolio including Excel
Project instructions:
This section includes the analysis of your actual fixed income selections and the bond market. This section will include financial ratio analysis as well as a written analysis of the investment choices that you made. In addition in this final section, you will need to forecast where you see things going in the next 6-12 month or 12-18 month time period.
I will send more detail requirement in additional materials.
There are two option can choose, i chose option two, because this is easy one.
and for the corporate, i choose “At&t”
you must completed this assignment by both excel work( i will give a template excel, you need completed all the excel sheet) and written work.
• Financial Market Analysis: Each approx. 3/4 – 1 ½ pages in length
a) Treasury Yield Curve
1. Has the yield curve changed or remained the same over the time period? Explain the current shape relative to past years. What does this imply about the future direction of the economy? Use your economic analysis as back up for these changes.
2. Graph the curve at year end 2010, 2011, 2012, 2013, 2014 (same chart)
b) Corporate Bond Credit Worthiness
1. Fill in the performance tab on your excel spreadsheet, completing bond sections.
2. Has high yield or investment grade outperformed and why?Evaluate over time and give reasoning again based on economic analysis.
3. Analyze the corporate default rate over the same time period, including default by investment versus non-investment grade, upgrades versus downgrades, bond issuance. Evaluate using economic analysis
• Forecast the economy & any resulting change ininterest rates& the stock market over the next year (approx. 6-12 months). You must discuss the direction of long term rates as well as short term rates. If you think monetary policy will shift in the next 6-12 months that should be part of your forecast as well. Include supporting information such as economic indicators or info from your yield curve and/or credit worthiness analysis (approx. 1 – 1 1/2 page)
Implementation: Fill in the portfolio distribution table for all securities invested. No more than 1/3 of your portfolio can be basic indexed funds/ ETF’s. For example, a general large cap ETF/ fund counts as part of that 1/3, but an ETF indexed to financials does not. No more than 5% can invested in any one individual asset but up 15% can be invested in a fund. You should choose at least one corporate bond (IG or HY) for an in depth analysis. This individual bond must have a maturity three years or longer for excel work.
Fixed Income Portion includes all bonds: Invest all your fixed income assets you identified in part one.(I will send you part one excel)
• Fixed Income Requirement:
a. Same portfolio analysis assessment as above
b. Same individual corporate bond analysis
c. Same quantitative and qualitative requirements
d. You must complete the whole fixed income portfolio – same requirements as above
a) Portfolio Analysis (should correlate to your economic/market forecast)
1. Describe your overall portfolio characteristics and compare to the Barclays Aggregate.
2. Explain your choice of portfolio duration, convexity and credit quality versus the index in relation to your forecast of interest rates, economy, etc.
b) Corporate Bond Analysis (approximately 2-3 pgs)
1. Give a very brief company summary in terms of industry, product, etc. State in your own words what the company does, industry etc.
2. Using your quantitative results and company research, analyze the credit quality of the company, focusing in on the company’s ability to repay principal and interest.
3. You MUST answer the following questions and not just review the ratios.
i. How profitable from an operating standpoint is your company?
ii. Does your firm have exposure internationally? Is it significant? Worrisome?
iii. Is your firm expanding or shrinking and have these activities affected your company’s cash flow/ profits? Why is it expanding? Shrinking?
iv. Look at the capital structure and liquidity over the past five years. Is your firm more or less financially leveraged? If so, what is it using the money for? If not, where did it get the cash flow to pay it down over time?
4. Has its credit rating changed over the past several years? If so, explain the change
Completing your portfolio: For funds, copy and paste performance, risk and expense data directly into excel worksheet and write abrief write-up of the fund or company. For individual bonds state the company’s credit rating and why this specific bond fits into your portfolio (a paragraph is sufficient – do not copy the profile of the company. Rather explain how this company fits into your client’s portfolio using a couple of ratios to back up your selection). For all funds, explain why you chose passive or active management and why this particular fund and/or ETF.
• Real Estate and Commodities: You can choose any investment vehicle you believe best suits the needs of your client. Write a paragraph stating why you have chosen to invest in this particular security or group of securities. If you are using funds, make sure you include all required data. If it is a stock, make sure to include why this particular company is the best choice.
• International: You can choose any investment vehicle that you believe best suits the needs of your client (ADR, mutual fund or ETF). In your written description, include your assessment of the country you are investing in as well as the company. You can look up ratios for your specific company or data for your specific mutual fund/ ETF
• Domestic Stocks: You can choose any investment vehicle that you believe best suits the needs of your client (individual stocks, mutual fund or ETF). Download (or source) any relevant ratios to use as support for your decision to become an investor in this company. Your stock portfolio can filled with all individual stocks or a combination of funds and stocks. It is need separate analysis for large cap, medium cap and small cap.
• Cash: Any type of money market security or fund will work
Required:Data and Calculations on Excel
a. Fill in Portfolio Distribution Tablefor the investments you made
i. Calculate the price, duration, etc of each individual bond based on settlement (due dateof paper)
ii. Calculate the yield to maturity, convexity and duration for the entire portfolio
iii. Calculate the full algebraic duration and convexity of one bondwith a maturity of longer than 3 years (All other durations/convexity can be calculated using excelor factset – must copy and paste information from factset into a spreadsheet for sourcing)
b. Ratio Analysis Table including comparisons to industry or competitor
i. All ratios can be downloaded directly into excel.
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