FIN 402 Week 2 Assignment Case Problem 13.1 Assessing the Stalchecks’ s Portfolio Performance( Part a, b, c, d)
you give Susan about the inherited portfolio? Explain the steps she should take to adjust the portfolio to her needs.
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FIN 402 Week 2 Assignment Case Problem 13.1 Assessing the Stalchecks’ s Portfolio Performance( Part a, b, c, d)
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Case Problem 13.1 Assessing the Stalchecks’ s Portfolio Performance Mary and Nick Stalcheck have an investment portfolio containing four investments. It was developed to provide them with a balance between current income and capital appreciation. Rather than acquire mutual fund shares or diversify within a given class of investments, they developed their portfolio with the idea of diversifying across various asset classes. The portfolio currently contains common stock, industrial bonds, mutual fund shares, and options. They acquired each of these investments during the past three years, and they plan to purchase other investments sometime in the future. Currently, the Stalchecks are interested in measuring the return on their investment and assessing how well they have done relative to the market. They hope that the return earned over the past calendar year is in excess of what they would have earned by investing in a portfolio consisting of the S & P 500 Stock Composite Index. Their research has indicated that the risk-free rate was 7.2 % and that the( before-tax) return on the S & P 500 portfolio was 10.1 % during the past year. With the aid of a friend, they have been able to estimate the beta of their portfolio, which was 1.20. In their analysis, they have planned to ignore taxes because they feel their earnings have been adequately sheltered. Because they did not make any portfolio transactions during the past