Short term financial investment instruments Product 1 Certificates of deposit (CDs or time deposits) The CDs of the main bank with which New York Financial Services operates have a credit rating of A according to Standard Poor's credit rating agency Types of CDs 3M 1 55 6M 1 65 9M 1 75 12M 1 95 Minimum nominal amount to invest to obtain these rates is USD 500,000 Product 2 Treasury bills (T bills) Types 3M 1 15 6M 1 15 9M 1 55 12M 1 85 18M 2 05 Minimum nominal amount to invest USD 500,000 to achieve these rates Product 3 Financial promissory notes issued by private companies After analyzing several alternatives existing in the money market from different issuers, with varying credit rating levels, the financial institution you are talking to proposes the following possibilities VRA Bank promissory note Entity's credit rating AA Minimum nominal amount to invest USD 1 million or multiples of USD 1 million (Terms from 1M to 12M to choose from) 1M 1 30 3M 1 50 6M 1 60 9M 1 80 12M 2 00 Etredesa promissory note Entity's credit rating A Minimum nominal amount to invest USD 500,000 or multiples Terms from 1M to 12M to choose from 1M 1 45 3M 1 65 6M 1 85 9M 1 95 12M 2 15 Tilofon promissory note Entity's credit rating B Minimum nominal amount to invest USD 500,000 or multiples Terms from 1M to 12M to choose from 1M 1 65 3M 1 95 6M 2 15 9M 2 25 12M 2 45 Long term financial investment instruments Fixed income instruments Among these instruments, different alternatives have been analyzed with the financial institution, which has proposed several instruments to the company U S Treasury Bonds Rating AA IRR 2 years 2 45 IRR 3 years 2 70 IRR 5 years 3 00 Minimum nominal amount to invest USD 500,000 or multiples American D bank corporate bonds Rating BBB IRR 2 years 3 15 IRR 3 years 3 40 IRR 5 years 3 65 Minimum nominal amount to invest USD 1 million or multiples Grafox corporate bonds (investment in EUR, different currency from the company, which is in USD) Rating B IRR 2 years 3 95 IRR 3 years 4 40 IRR 5 years 4 95 Minimum nominal amount to invest USD 500,000 or multiples Equity instruments There are many possibilities to invest in this market, but, as a risk identifier, taking the beta of the shares (correlation indicator between the evolution of the reference stock market index, Dow Jones, and the evolution of the company's share price), one can select among the following shares Stocks with beta 2 (high risk) Stocks with beta 1 (risk equivalent to the stock market average or DJ index) Shares with beta 0 50 (moderate risk) It is not necessary to specify a specific type of stock, but in the case of choosing to invest in equities, what amount would be allocated and on what type according to its beta Assessment criteria Recommendations of the Board of Directors According to the quotations obtained, a decision must be made on how to manage liquidity, which investment portfolio to make (in which instruments to invest, what nominal amount of the 30 million and at what maturity) and the reasoning behind the choice, knowing that the company's Board of Directors has established some criteria for liquidity management that are fundamental for the CFO's decision making The investment horizon must be consistent with the current situation of the company, the sector and the economic scenario, as well as with the needs for recovery of such investments according to the scenarios envisaged Significant risks should be avoided when taking positions Risks should not be taken at rating levels considered to be speculative or non investment grade Profitability should be maximized over the considered term The following calculations are requested In which of the financial instruments or assets should no investment be made according to the Board's assumptions Give reasons for your answer Define your investment portfolio Amount you are going to invest in the selected financial assets and their maturities Give reasons for the selection of financial instruments and maturities in the previous question In case of carrying out short term investment operations, in order to subsequently renew them, what type of instruments would you contract in order to avoid interest rate risks

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Short-term financial investment instruments: Product 1: Certificates of deposit (CDs or time deposits). The CDs of the main bank with which New York Financial Services

Short-term financial investment instruments:

Product 1:Certificates of deposit (CDs or time deposits). The CDs of the main bank with which New York Financial Services operates have a credit rating of A+ according to Standard & Poor's credit rating agency.
Types of CDs:
3M: 1.55 %.
6M: 1.65 %.
9M: 1.75 %.
12M: 1.95 %.
Minimum nominal amount to invest to obtain these rates is: USD 500,000.

Product 2: Treasury bills (T-bills):
Types:
3M: 1.15 %.
6M: 1.15 %.
9M: 1.55 %.
12M: 1.85 %.
18M: 2.05 %.
Minimum nominal amount to invest: USD 500,000 to achieve these rates.

Product 3: Financial promissory notes issued by private companies. After analyzing several alternatives existing in the money market from different issuers, with varying credit rating levels, the financial institution you are talking to proposes the following possibilities:

VRA Bank promissory note:
Entity's credit rating: AA.
Minimum nominal amount to invest: USD 1 million or multiples of USD 1 million.
(Terms from 1M to 12M to choose from):
1M: 1.30 %.
3M: 1.50 %.
6M: 1.60 %.
9M: 1.80 %.
12M: 2.00 %.

Etredesa promissory note:
Entity's credit rating: A.
Minimum nominal amount to invest: USD 500,000 or multiples.
Terms from 1M to 12M to choose from:
1M: 1.45 %.
3M: 1.65 %.
6M: 1.85 %.
9M: 1.95 %.
12M: 2.15 %.

Tilofon promissory note.
Entity's credit rating: B.
Minimum nominal amount to invest: USD 500,000 or multiples.
Terms from 1M to 12M to choose from:
1M: 1.65 %.
3M: 1.95 %.
6M: 2.15 %.
9M: 2.25 %.
12M: 2.45 %.

Long-term financial investment instruments:

Fixed-income instruments: Among these instruments, different alternatives have been analyzed with the financial institution, which has proposed several instruments to the company:

U.S. Treasury Bonds:
Rating: AA+.
IRR 2 years: 2.45 %.
IRR 3 years: 2.70 %.
IRR 5 years: 3.00 %.
Minimum nominal amount to invest: USD 500,000 or multiples.
American D. bank corporate bonds:
Rating: BBB
IRR 2 years: 3.15%.
IRR 3 years: 3.40%.
IRR 5 years: 3.65%.
Minimum nominal amount to invest: USD 1 million or multiples

Grafox corporate bonds (investment in EUR, different currency from the company, which is in USD).
Rating: B.
IRR 2 years: 3.95%.
IRR 3 years: 4.40 %.
IRR 5 years: 4.95 %.
Minimum nominal amount to invest: USD 500,000 or multiples.

Equity instruments: There are many possibilities to invest in this market, but, as a risk identifier, taking the beta of the shares (correlation indicator between the evolution of the reference stock market index, Dow Jones, and the evolution of the company's share price), one can select among the following shares:

Stocks with beta = 2 (high risk).
Stocks with beta = 1 (risk equivalent to the stock market average or DJ index).
Shares with beta = 0.50 (moderate risk).

It is not necessary to specify a specific type of stock, but in the case of choosing to invest in equities, what amount would be allocated and on what type according to its beta.

Assessment criteria

Recommendations of the Board of Directors

According to the quotations obtained, a decision must be made on how to manage liquidity, which investment portfolio to make (in which instruments to invest, what nominal amount of the 30 million and at what maturity) and the reasoning behind the choice, knowing that the company's Board of Directors has established some criteria for liquidity management that are fundamental for the CFO's decision making.

The investment horizon must be consistent with the current situation of the company, the sector and the economic scenario, as well as with the needs for recovery of such investments according to the scenarios envisaged

Significant risks should be avoided when taking positions. Risks should not be taken at rating levels considered to be speculative or non-investment grade.

Profitability should be maximized over the considered term.

The following calculations are requested:

In which of the financial instruments or assets should no investment be made according to the Board's assumptions? Give reasons for your answer.
Define your investment portfolio: Amount you are going to invest in the selected financial assets and their maturities.
Give reasons for the selection of financial instruments and maturities in the previous question.
In case of carrying out short-term investment operations, in order to subsequently renew them, what type of instruments would you contract in order to avoid interest rate risks?