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Your Aunt Agnes is ready to retire after a 4 4 - year career as a nurse. She will be 6 5 on April 1
Your Aunt Agnes is ready to retire after a year career as a nurse. She will be on April st and desires nothing more than to move to Florida and live in a small condo on a beach a two bedroom, so her favorite relative you can visit anytime Aunt Rita estimates that to live in Florida, she will need approximately $ per year to live on Her Social Security Check is estimated at the national average of $ per month.
Your task? Using the Rule of and her $ in K savings, create a diversified investment portfolio that will allow Aunt Agnes to live out her dream. Then, create a simple writeup of your plan, noting why you chose to make the investment decisions you did.
Step : Determine Stocks Bonds
First, determine the mix of stocks and bonds she should have. To do this, you will need to solve the bond problems in the box below for one missing item.
Bond Problems
A year bond issued by Bank of America with a coupon and a yield to maturity.
A year Treasury bond with a yield to maturity and a coupon.
An year Treasury bond paying $ every six months and a annual yield to maturity.
A year bond issued by Duke Energy with a coupon and market interest rate.
A development bond issued by the new St Louis soccer stadium developers, priced at $ per bond, with a market interest rate of and a year life.
A semiannual year Treasury bond with a yield to maturity of and a price of $
An Apple corporate bond with years left to maturity is priced at $ and a market rate of
A year Treasury, priced at $ paying $ annually.
A year bond from Walmart with a $ interest payment every six months is priced at $
A year Treasury bond with a coupon is priced at $
Step : Generate an Investment Table
Generate a table of the investments you recommend with these guidelines:
Agnes wants to live off of her social security payments, bond interest payments, and stock market gains.
A diversified stock index your only stock market choice has an expected return of
Note: The bond portfolio will consist of individual bonds but needs to be diversified. In the real world, that means at least different bond issues across sectors duration, and geography. For this assignment, there will be a minimum of bonds you can use more and no one bond can be more than of the total bond portion of her assets.
Do not worry about taxes.
Do not worry about inflation.
The table should show how she is to meet or beat her $ annual income goal, showing ALL of her sources of income.
The table should clearly label which bonds you chose.
The table should be well formatted and cut and pasted into the Word document that you use to answer the questions.
Step : Write Your Explanation
Using Word, write a short explanation of your choices, including how you determined them and why there is a mix between the assets.
Explain why you picked the bonds that you did, think particularly about the table you generated.
Cut and paste the table into your Word document to illustrate your thinking.
Finally, explain at least one risk associated with the bond investments.
Create a Portfolio Rubric
Criteria Ratings Pts
Excel Bond Questions
pts
Full Marks
All Correct, point each
pts
Developing
Missed questions
pts
Needs Improvement
Missed questions
pts
No Marks
No Attempted
pts
Excel Rule of
pts
Full Marks
of Stocks properly calculated and applied to table
pts
Developing
Rule of used, but mistakenly done for bond percentage
pts
No Marks
Not used
pts
Excel Social Security and Stock Income
pts
Full Marks
Properly calculated and put into table
pts
Developing
One properly calculated, the other not
pts
No Marks
Not attempted
pts
Excel # of Bonds
pts
Full Marks
At least bond used, totaling no more than $ PV used to determine bonds purchased, whole bonds only.
pts
Developing
Either too many or few bonds used, total spent exceeded $ or PV not used to determine number of bonds purchased
pts
No Marks
Multiple errors make it impossible to follow
pts
Excel Cash Flows from Bonds properly identified
pts
Full Marks
Annual income calculated by # of bonds X Annual Coupon
pts
Developing
Annual Income Calculated properly for some, but not all, or partial bonds used
pts
No Marks
Not calculated
pts
Excel Formatting
pts
Full Marks
Format easy to read, well labelled
pts
Developing
Struggled to follow method due to formatting, but ultimately accomplished
pts
No Marks
Unable to determine method due to formatting
pts
Word Doc Explanation of Stock and Bond Mix
pts
Full Marks
Explanation of the Rule of and the reasons for the rule.
pts
Developing
Rule of used and stated, but not fully explained
pts
No Marks
No explanation
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