Final Project 2: Portfolio Analysis
Part A: Research Online
Trading Sites and DRIPs
For this part of the
assignment, you will evaluate the choices in purchasing stock via online
brokerage accounts (where you can buy and sell stock via the Internet) and the
use of dividend reinvestment plans (known as DIPs and DRIPs) or mutual funds or
For online brokers, you
will be looking for the requirements to open the accounts: costs, minimum
balances, and other features. Because most DIPs or DRIPs are available from
publicly traded companies, you can search their Web sites or a search engine on
these plans and their requirements.
Perhaps the most famous
and useful Web site for these programs is http://www.directinvesting.com/. You are to compare and contrast online
brokerage to DIPs and DRIPs.
Research online trading
sites and DRIPS as outlined below, and summarize your findings. Make sure to
include a summary table of the relevant information.
- Search three online trading sites, and determine the
requirements for trading, including the price per trade. Compare and
contrast the online trading companies. (2–3 pages)
- Search the Web for three companies (look for investor
information) that offer DIPs or DRIPs. (2–3 pages)
- Compare and contrast the requirements, including minimum
investments, nature of the return, costs, and other features. (1–2 pages)
Part B: Research Market
Data on Bonds
Research the current
(within the last two months) market data on bonds from AT&T, Dell, and IBM.
Assume each bond has a par value of $1000, unless otherwise indicated. Cite
- Complete the table above.
- Calculate the value of the bond if your required
return is 5% on AT&T, 6.5% on Dell, and 8% on IBM.
- Determine the yield to maturity (YTM) on the bonds
given the current price. Based on each bond’s ratings and your
determination of its yield to maturity, explain how you rank each bond
for risk and return.
should be in a 5–10 page Microsoft Word or Excel document, showing your
calculations. You can use the formulas embedded in Microsoft Excel and/or a
financial calculator for these calculations.