Background Information James has no investment policy or guidelines for investing. James, 34, works as a real estate developer. Jamess company is responsible for building many of the luxury residential buildings in Honolulu. He has no family or girlfriend and has been working 1418-hour days for the last 6 years. He has accumulated 1.5 million dollars over his career but hasnt had time to invest the money. He was recently promoted and will not need to work as many hours as he has in the past. He plans to start dating, marry, and start a family in the next 5 years. He currently owns an apartment valued at $800,000. He plans to keep or sell the apartment in five years to buy a $1 million dollar home. If he keeps the apartment, he can lease the unit for $4,500 and the monthly maintenance fee is $2,100.

James doesnt expect his future spouse to provide any income when he marries. His recent promotion came with a salary of $250,000 per year and he was given an apartment from the most recent building constructed. The expected value for the unit is expected to be $750,000 upon completion in a week. He doesnt know if he should sell the unit or lease the unit for $4,000. The maintenance fee for the building will be $1,500 a month.

Personality James is risk averse but knows risk is necessary for opportunities. He is comfortable taking a chance as long as the possible benefit outweighs the risk. He understands his investing strategy must include some risk to provide the necessary growth and returns. He expects to work as a real estate developer for the next 20 years. He wants to retire early and live on the money generated from his portfolio. He expects to have one child and pay for undergraduate school in twenty-four years.

Benchmark

The bond benchmark will be provided. You will need to select a stock benchmark for the next part of your project. Consider the types of securities you will have in your portfolio. You will need to use the benchmark to compare your portfolios performance against. Save yourself time by downloading historical data for two years when you select your stock benchmark.

Bond Benchmark: Provided

Market Benchmark: (DJIA, S&P 500, NASDAQ)

Asset Allocation Scheme

Decide on an appropriate allocation scheme for the level of risk and return necessary to meet your profiles investment requirements. Consider the constraints and bonds available to meet your objective.

Asset Class	As a % of (______)	Total Capital (______)
Debt
Equities
ETFs

Debt Allocation

What return will your debt allocation need to contribute to your portfolio? What was the return requirement for your portfolio? What risk tolerances must you work within? How will the allocation to your fixed income affect your overall portfolio?

Maturity Ranges

Short-term (1-3 years)

Medium- or Intermediate-term (4-10 years)

Long-term (10+ years)

Bond Search Criteria

Asset Class: Corporate Bonds

Security Status: Active

Currency: USD

Credit Rating: (S&P 500) AAA-BBB

Coupon Type: Fixed (Vanilla)

Enterprise Value: >= $500,000

Maturity: relative ranges more than two years.

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Deliverables

Determine the allocation scheme you will use for your portfolio.

Determine the benchmark you will use for the stock portion of your portfolio.

Select at least four bonds. Do not include more than six bonds.Include all the bond information (this list will get you started but what else might you include?)

Issuer Name

CUSIP

Credit rating

Maturity

Maturity type

Coupon rate (Yield)

YTM

Payment frequency

Sector

Note: Include the information in an Excel workbook.

Explain why you selected each bond in your portfolio. You must be concise and quantitatively support your statement.

Explain the criteria used to select the bonds in your portfolio.

What risks are you exposing your portfolio to by investing in the bonds you selected?