Case Study

A friend has confided in you that they have recently inherited a moderately sized investment portfolio from a relative. They don’t know what to do with the assets. 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.

To complete this assignment, download and refer to the investment schedule (Excel file). 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 are the different uses of both?
• What non-quantitative observations can you make about the portfolio?

Although you can transfer tables from Excel into Word, include the original Excel file in addition to the Word file with your submission. 

Papers will be assessed using the following criteria:

• The solved solutions for: 
  • The current market value of each security position of the portfolio.
  • Individual yields (estimated current yield) based on current market pricing.
  • The weighted average factor.
  • The weighted average yields.
• An explanation of how the weighted average yield was determined.
• An explanation for the difference between a yield that is based on cost, as opposed to one that is based on current market value. The explanation discussed the different uses of both.
• Non-quantitative observations (narrative) about the portfolio.