Provide a detailed overview of the selected U.S. investment indicating the rationale for your selection and plans for a diversified portfolio.

Assignment 2: Investment Analysis

Note: Please include any financial statements or relevant financial information in an appendix.

Write a four to six (4-6) page paper in which you:

  1. Provide a detailed overview of the selected U.S. investment indicating the rationale for your selection and plans for a diversified portfolio.
  2. Select five (5) financial ratios, then analyze the past three (3) years of financial data for the investment (please obtain data from the financial statements or the equivalent).
  3. Analyze the price of the investment to stock market beta for the past five (5) years.
  4. Create a trend line that depicts the price movement for the investment against the market index movement using elements of Microsoft Office, such as Excel, Visio, MS Project, or one of their equivalents (such as Open Project, Dia, and OpenOffice) as appropriate. Note: The graphically depicted solution is not included in the required page length.
  5. Determine the type of person who would be the best candidate for the chosen investment (e.g., the risk adverse investor, an aggressive investor, a broker and a dealer in the market, etc.). Provide a rationale for why this investment is a solid one and support the assertion that someone should invest in this stock.
  6. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia and similar websites do not qualify as academic resources. Visit the Strayer University Library at

Your assignment must follow these formatting requirements:

  • This course requires use of new Strayer Writing Standards (SWS). The format is different than other Strayer University courses. Please take a moment to review the SWS documentation for details.
  • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow SWS or school-specific format. Check with your professor for any additional instructions.
  • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

  • Examine common debt and equity securities, and analyze the relative risks and returns associated with each.
  • Analyze how the securities business works through stockbrokers and investment bankers using the physical exchanges, network exchanges, and OTC markets.
  • Perform and interpret basic security analyses using indexes, averages, and various technical methods, as well as compounding, discounting, and forecasting.
  • Propose ways to apply various strategies in the management of financial investment portfolios in order to optimize profits (and minimize taxes) within acceptable risks.
  • Find and utilize sources of pertinent investing information on a company, its industry, the economy as a whole, and the international environment to analyze investment potential.
  • Examine the differences between various investments such as options, convertibles, warrants, rights, and commodities.
  • Illustrate how to use hybrid and derivative instruments such as convertibles, warrants, rights, options, and futures contracts in investment strategies.
  • Use technology and information resources to research issues in investments.
  • Write clearly and concisely about investments using proper writing mechanics.Running head: INVESTMENT 4


    Crystal Messer

    FIN 320

    Question 1

    The investment that I chose is corporate bonds for the JP Morgan Company. I looked at the three financial statements: Balance sheet, income statement, and free cash flow. The income statement shows that the income of the company has been increasing from 2015 to 2018.The gross profit in 2015 was $ 89,202,00,91,208,000 in 2016,94,745,000 in 2017 and 103,984,000 in 2018.The operating expenses have also been increasing in the last five years. This is also the case for net income from continuing operations. The balance sheet shows that total assets have been equaling total liabilities for the past five years, and this leads to the creation of an equilibrium. This means the company is doing good business since it does have a lot of debts whose value is high than its assets (Robins et al.,2003). The cash flow of the company has been increasing from the past five years. Calculation of free cash flows enables a company to know the amount of money that a company is producing thus develop strategies of improving it if need be.

    The diversification of portfolio enables different investment to be carried out, which lead to a higher return. Strategies include the following:

    · The company should be keen on commissions to track the fees it is charging. This is because some companies charge some transactional gees and monthly charges. The commissions can chip away at the bottom-line when they add up. The company should be aware of what they are paying and what they are getting for it (DeMiguel et al.,2007). The company should update its shareholders in case of any charges to their fees.

    · ·        The   Company should know when to move out. This helps to cut losses and move to the next investment. Averaging of dollar cost and buying and holding are part of sound strategies the company should be able to get information regarding changes that occur in the market and be up to date with their investments. This enables the company to sell and move to the next investment

    · The company should keep building the portfolio. This helps to lower the risk of investment by ensuring it gets the same amount of money over and over. The company should add to its investment regularly. Peaks and valleys that are created by volatility in the market are smoothed out in the process. Investment of money regularly to a particular securities’ portfolio is done using dollar-cost averaging (Robins et al.,2003). This makes a high number of shares to be sold when prices are low and a few to be sold when prices are high.

    · Consideration of bond funds or index. Investment done in securities helps to diversify portfolio investment. Additional income solutions that are fixed leads to portfolio hedgement against market volatility. The funds reflect the market value of the bonds.

    · The company should spread the wealth and invest in different stocks. Investment in commodities should also be considered.

    Question 2

    Investing in JPMorgan Chase & Co. bonds would be the best choice as the bonds are at their best price right now. The beta value of JPMorgan bonds is 1.1, meaning the investment would attract a less risk. The potential rate of return reads at 69.77%. Both the beta value and the rate of return have been calculated using the past five years’ financial data. (8/12/2015 -8/12/2019). Hence the risk of investing in JPMorgan as portrayed by the beta value (1.1) is too low compared to the potential rate of return. (69. 77%).Therefore the investment is worthwhile.

      JP Morgan S&P 500 Index
    Returns 69.77% 41.88%
    Variance 0.003304547 0.00121199
    Covariance 0.001365806
    Beta Value 1.126913589


    Cornett MM, Saunders A.,9(2003). Financial institutions management: A risk management approach.

    Robins JA., Wiersema MF. (2003). The measurement of corporate portfolio strategy: Analysis of the content validity or related diversification indexes. Strategic Management Journal.

    DeMiguel V., Garlappi L., Uppal R., (2007). Optimal versus naïve diversification: How inefficient is the 1/N portfolio strategy? The review of financial studies. 22(5). (1915-1953).


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