University of Miami Proposed

Prepare a report to the client from your employer on a proposed fixed-income portfolio.

At this time, you may replace any one or all of the bonds in the portfolio below but you must include at least six bonds and no more than eight bonds in your final portfolio. You may include corporate bonds, asset-backed securities, U.S. Treasury securities, non-sovereign U.S. government bonds (e.g., city or state bonds), or quasi-government bonds. You may apportion the bonds any way you want; however, no single bond can be less than 5% of the portfolio and no single bond can be more than 50% of the portfolio.

Issuer Name

Symbol

Convertible

Coupon %

Maturity Date

Credit Rating – S&P

List Price – Sale in $

List Price – Yield in %

Callable

Puttable

Schwab Charles Corp New

SCHW4836967

Yes

3.25

5/22/2029

A (Investment)

110.36

1.793

Yes (02/22/2029)

100

No

Exxon Mobil Corp

XOM4218990

No

3.567

3/6/2045

AA- (Investment)

108.46

3.055

Yes (09/06/2024)

100

No

Apple Inc.

AAPL4208639

No

3.45

2/9/2045

AA+ (investment)

111.77

2.767

Yes (Continuous)

100

No

Royal Caribbean Cruises Ltd

RCL4568009

No

3.70

3/15/2028

B

(High Yield)

95.98

4.399

Yes (12/15/2027)

100

No

JP Morgan Chase & Co

JPM4203227

No

3.125

1/23/2025

A- (Investment)

107.27

0.89

Yes (10/23/2024)

100

No

Caterpillar Inc.

CAT4884921

No

3.25

9/19/2049

A (Investment)

110.44

2.711

Yes (03/19/2049)

100

No

Intel Corp

INTC4914060

No

3.25

11/15/2049

A+ (Investment)

106.58

2.904

Yes (05/15/2049)

100

No

Key Bk Natl Assn Ohio

KEY.KO

No

3.18

10/15/2027

A- (Investment)

102.06

2.533

No

Yes

(04/14/2022)

100

As a reminder, here is the client:

The Client: This client is 52 years old, has no debt, and has significant assets under management with the firm. The client has allocated 2% portion of their assets for individual bond investing. This segment of the portfolio is held in the client’s retirement accounts, and the client expects to retire at age 65. The client has an average risk tolerance.

In your report,

* Define at least three investment objectives for the fixed-income portfolio.

* Produce a table identifying the chosen bonds, the primary characteristics of the bonds (including the rating), and the weights of the bonds in the portfolio.

*Using the spot rates, you used in your Yield Curve and Forecast Report from Week 2, provide an analysis to the client on the arbitrage-free valuation of two bonds in the portfolio (use only non-convertible corporate bonds from the portfolio).

oThis should be presented as the sum of the present values of expected future values using the benchmark spot rates.

oCompare the arbitrage-free valuation to the current market value of the two chosen bonds.

*State your conclusion as to whether an arbitrage-free opportunity exists for these two bonds.

*Calculate the duration of the portfolio.

*Explain any changes to the bond portfolio that occurred in Week 4 or Week 6.

*Identify one bond index to use as a benchmark for this portfolio. Be sure to explain how the bond index compares in terms of market value risk and income risk.

*Identify characteristics of the bond index that will cause the bond index performance to vary from the client bond portfolio.*

*Calculate the tracking risk of this bond portfolio versus the chosen index, based on five years of returns for the bonds and the indexes through the current date.

*identify one to three bond index funds that would be appropriate for the client, based on their defined investment objectives.

*Recommend one of the following options to the client:

o Implement the bond portfolio.

o Implement the bond index fund portfolio.

Paper should be in APA style, includes an introduction paragraph as well as a conclusion. It should also have at least 6. Academic journals or scholarly journals. The paper should also have less than 20% originality score. All bulleting points should also be

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