Number 3 The High Yield Dilemma Case You were recently hired by a large company with a 401K plan. They gave you extensive paperwork to fill out including at least thirty different mutual funds to choose from. You worry about the stock market. The last two years have not been good for stocks. You have decided to invest in fixed income because it is safer. However, you are concerned that returns, while safe, tend to be low in this type of investment. Interest rates have gone up in the last two years or so. That's good, making bonds more attractive. You know that "junk bonds," more properly called unrated bonds, tend to give a higher return. Write a paper showing what percentage of your fixed income retirement investment should be in junk bonds. That means you must give a specific percentage. Be clear on what a junk bond is. Analyze the attractive and unattractive aspects of a junk bond. Don't overlook the probability of default. Remember that a portion of your fixed income portfolio will still be invested in rated (non-junk) bonds. Be specific on the junk bond percentage you recommend and why you feel this is a smart choice. Show real MBA skill in making your case. Identify the three actual mutual funds for your retirement funds. Do not write, "I would pick some funds..." Identify actual funds. Show that they contain junk bonds, have a track record of success with these risky investments and will meet your investment preferences. A Few Pointers for Good Students: - Check out Morningstar to get a rating that could justify your choices. - You might identify some reasonable benchmark, such as rising at some percentage over the last five years. - Look for facts and evidence to support your recommendations. - Do not fill your paper with definitions or opinions. - Give current information