nibbs_iris_fin seminar term project_final

Kratchman Portfolio Management

Drexel University Spring 2015 Finance Seminar

Trailblazer Investment Advisors (TIA)

IRIS NIBBS, CFA

2 Kratchman Portfolio Management

Table of Contents

Objective ................................................................................................................................ 4 Introduction ................................................................................................................................................................................. 4 Economic Analysis .................................................................................................................. 5 GDP/Consumer and Government Spending .................................................................................................................. 5 2013 ................................................................................................................................................................................................. 6 2014 ................................................................................................................................................................................................. 9 2015 Q1 ......................................................................................................................................................................................... 12

Unemployment Level ............................................................................................................................................................ 13 2013 ............................................................................................................................................................................................... 13 2014 ............................................................................................................................................................................................... 14 2015 Q1 ......................................................................................................................................................................................... 14

Interest Rates/Housing Market ........................................................................................................................................ 15 2013 ............................................................................................................................................................................................... 15 2014 and 2015 Q1 .................................................................................................................................................................... 15

Currency/Level of Inflation ................................................................................................................................................ 16 2013 ............................................................................................................................................................................................... 17 2014 and 2015 Q1 .................................................................................................................................................................... 19

Stocks ........................................................................................................................................................................................... 20 2013 – 2015 Q1 ......................................................................................................................................................................... 21 Default risk and Overall Credit Quality .......................................................................................................................... 21 Interest Rates and the Economy’s Future ...................................................................................................................... 22

Asset Allocation .................................................................................................................... 24 Cash ................................................................................................................................................................................................ 25 Domestic Equity ........................................................................................................................................................................ 25 Bonds ............................................................................................................................................................................................. 25 International Exposure .......................................................................................................................................................... 25 Commodities ............................................................................................................................................................................... 25 Real Estate ................................................................................................................................................................................... 25

Current Holding Assessment ............................................................................................................................................. 26 TWX ................................................................................................................................................................................................ 26 TWC ................................................................................................................................................................................................ 26 DLTR .............................................................................................................................................................................................. 27 Commercial Paper ................................................................................................................................................................... 27

Implementation .................................................................................................................... 28 Microchip Technology Inc. (MCHP) .................................................................................................................................. 28 Exchange Traded Funds ........................................................................................................................................................ 31 Large cap ($5B or higher)-‐‑ 18% ........................................................................................................................................ 33 Mid cap ($1B -‐‑ $5B)-‐‑ 9% ....................................................................................................................................................... 36 Small cap ($1B or lower)-‐‑ 9% ............................................................................................................................................ 37 International-‐‑ 22% .................................................................................................................................................................. 38 Specific Commodities-‐‑ 15% .................................................................................................................................................. 40 Cash/Risk Free Asset-‐‑ Choose MMF-‐‑ 7% ........................................................................................................................ 41

Kratchman Portfolio Management 3

Bibliography .......................................................................................................................... 42

Appendix ............................................................................................................................... 49 Cash Flow Sheet ....................................................................................................................................................................... 49 Asset Allocation Table .......................................................................................................................................................... 50 Portfolio Distribution Table ............................................................................................................................................... 51 Ratios on Bond Company .................................................................................................................................................... 52 Duration on Bond ................................................................................................................................................................... 53 Fund/ETF Supporting Data ................................................................................................................................................ 54 Valuation Ratios for Individual Stocks .......................................................................................................................... 55


Objective

Introduction

This spring 2015 I will be taking on the family of Sam and Amy Kratchman as a new client

of the TIA firm. They were left with $1,000,000 and they will be choosing the best if they left

this investment with our firm. We understand that they are planning to retire with this

inheritance along with providing their children with a comfortable life. This will include looking

into having enough money to get a beach house, retiring in 26 years (at age 65) and putting

their two children through college. I will be aiming to create one of the best-‐diversified

portfolios for them. In order to do this there will be a set of analyses and then proper

recommendations in the end to see where the best areas will be to invest The Kratchman’s

money. First I will be analyzing the economy from 2013 up to and including present day

(Quarter 1 of 2015). Then I will create a portfolio that includes the risk and return of it, while

also including the asset allocations. Sam and Amy Kratchman will be put into great hands if they

join TIA through their journey of a newly found inheritance.


Economic Analysis

GDP/Consumer and Government Spending

Figure 11

1 http://bea.gov

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2008 2009 2010 2011 2012 2013 2014Gross%domestic%product%(GDP) )0.3 )2.8 2.5 1.6 2.3 2.2 2.4!Personal%consumption%expenditures )0.3 )1.6 1.9 2.3 1.8 2.4 2.5!!Goods................................ )2.5 )3.0 3.4 3.1 2.8 3.4 3.4!!!!Durable!goods...................... )5.1 )5.5 6.1 6.1 7.3 6.7 6.9!!!!Nondurable!goods................... )1.1 )1.8 2.2 1.8 0.7 1.9 1.8!!Services............................. 0.8 )0.9 1.2 1.8 1.3 1.9 2.0!Gross%private%domestic%investment )9.4 )21.6 12.9 5.2 9.2 4.9 5.9!!Fixed!investment..................... )6.8 )16.7 1.5 6.3 8.3 4.7 5.3!!!!Nonresidential..................... )0.7 )15.6 2.5 7.7 7.2 3.0 6.3!!!!!!Structures....................... 6.1 )18.9 )16.4 2.3 13.1 )0.5 8.1!!!!!!Equipment........................ )6.9 )22.9 15.9 13.6 6.8 4.6 6.5!!!!!!Intellectual!property!products... 3.0 )1.4 1.9 3.6 3.9 3.4 4.9!!!!Residential........................ )24.0 )21.2 )2.5 0.5 13.5 11.9 1.6!%%Exports 5.7 )8.8 11.9 6.9 3.3 3.0 3.1%%Imports )2.6 )13.7 12.7 5.5 2.3 1.1 4.0!Gov't%expenditures%&%investment 2.8 3.2 0.1 )3.0 )1.4 )2.0 )0.2!!Federal.............................. 6.8 5.7 4.4 )2.7 )1.8 )5.7 )1.9!!!!National!defense................... 7.5 5.4 3.2 )2.3 )3.3 )6.6 )2.2!!!!Nondefense......................... 5.5 6.2 6.4 )3.4 1.0 )4.1 )1.5!!State!and!local...................... 0.3 1.6 )2.7 )3.3 )1.2 0.5 1.0

Real%GDP:%Percent%Change%From%Preceding%Year


Figure 22

2013

In 2013 there were a lot of influences that made the GDP grow but not at a great amount. To

start 2013 did not start out well since the government was not stable at the time. There was a

government shutdown that greatly influenced the markets in the first quarter. It was one of the

longest government shutdowns in U.S. history aside from the one that occurred in the mid

1990s. It cost The United States nearly $2billion in productivity.3 This later hurt the economy

because the economic growth slowed down immensely just by the government being

shutdown for 16 days. By the government shutting down this causes uncertainty that later cost

$2 to $6billion in economic growth. Consumer spending was also stopped because national

2 http://bea.gov 3 http://www.washingtonpost.com/politics/federal-‐government-‐shutdown-‐cost-‐2-‐billion-‐in-‐lost-‐productivity-‐omb-‐report-‐says/2013/11/07/e883c3ec-‐47f2-‐11e3-‐bf0c-‐cebf37c6f484_story.html

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2011 2012 2013 2014 2013Q1 Q2 Q3 Q4 2014Q1 Q2 Q3 Q4!!!!Gross!domestic!product......... 1.6 2.3 2.2 2.4 2.7 1.8 4.5 3.5 -2.1 4.6 5.0 2.2!!!Personal!consumption!expenditures 1.55 1.25 1.64 1.72 2.45 1.23 1.39 2.51 0.83 1.75 2.21 2.83!!!!Goods............................... 0.71 0.64 0.78 0.78 1.35 0.30 0.80 0.83 0.23 1.33 1.06 1.01!!!!!!Durable!goods..................... 0.43 0.52 0.49 0.50 0.61 0.33 0.36 0.42 0.23 0.99 0.67 0.44!!!!!!Nondurable!goods.................. 0.28 0.12 0.29 0.28 0.74 -0.03 0.43 0.41 0.00 0.34 0.39 0.57!!!!Services............................ 0.84 0.61 0.86 0.94 1.11 0.93 0.59 1.69 0.60 0.42 1.15 1.82!!!Gross!private!domestic!investment 0.73 1.33 0.76 0.93 1.12 1.03 2.50 0.62 -1.13 2.87 1.18 0.84!!!!Fixed!investment.................... 0.86 1.17 0.70 0.83 0.42 0.74 1.01 0.95 0.03 1.45 1.21 0.71!!!!!!Nonresidential.................... 0.85 0.84 0.37 0.78 0.20 0.21 0.67 1.23 0.20 1.18 1.10 0.61!!!!!!!!Structures...................... 0.06 0.32 -0.01 0.22 -0.33 0.19 0.29 0.34 0.08 0.35 0.14 0.14!!!!!!!!Equipment....................... 0.66 0.37 0.26 0.36 0.28 0.09 0.27 0.76 -0.06 0.63 0.63 0.05!!!!!!!!Intellectual!property!products.. 0.13 0.15 0.13 0.19 0.24 -0.08 0.11 0.14 0.18 0.21 0.34 0.41!!!!!!Residential....................... 0.01 0.33 0.33 0.05 0.22 0.53 0.34 -0.28 -0.17 0.27 0.10 0.11!!!!Change!in!private!inventories....... -0.14 0.15 0.06 0.10 0.70 0.30 1.49 -0.34 -1.16 1.42 -0.03 0.12!!!Net!exports!of!goods!and!services -0.02 0.04 0.22 -0.23 -0.08 -0.54 0.59 1.08 -1.66 -0.34 0.78 -1.15!!!!Exports............................. 0.87 0.44 0.41 0.42 -0.12 0.82 0.67 1.30 -1.30 1.43 0.61 0.42!!!!Imports............................. -0.89 -0.40 -0.19 -0.65 0.04 -1.36 -0.09 -0.22 -0.36 -1.77 0.16 -1.58

!!Govt!expenditures!&!investment -0.65 -0.30 -0.39 -0.03 -0.75 0.04 0.04 -0.71 -0.15 0.31 0.80 -0.32!!!!Federal............................. -0.24 -0.15 -0.45 -0.14 -0.79 -0.26 -0.08 -0.79 -0.01 -0.06 0.68 -0.54!!!!!!National!defense.................. -0.13 -0.18 -0.33 -0.10 -0.55 -0.09 0.03 -0.55 -0.18 0.04 0.66 -0.58!!!!!!Nondefense........................ -0.11 0.03 -0.12 -0.04 -0.24 -0.17 -0.11 -0.24 0.17 -0.10 0.01 0.04!!!!State!and!local..................... -0.41 -0.15 0.06 0.11 0.04 0.31 0.13 0.07 -0.14 0.38 0.13 0.22

Contributions!to!Percent!Change!in!Real!Gross!Domestic!Product


parks were shut down during this time costing around $500million in visitor spending.

Production of goods and services were halted for 6.6 million days due to the number of

employees not being able to work during this time as well.4 GDP was greatly affected by this

and Figure 2 shows this with the quarter-‐to-‐quarter numbers. That can also be the reason as to

why government spending was negative in the first quarter of 2013.

Gas prices also rose during 2013 and this had an influence on consumer spending.

Approximately 70% of consumers say that gas prices do have an influence on their spending.5

As gas prices rose they have to alter something else in their life, such as lowering the quality of

food that they buy to use that money towards the gas that they buy. Also people will

sometimes change the type of car that they own to have a car with better mileage or cheaper

gas intake. In 2013 gas was around $3.46/gallon in the beginning of the year then towards the

end of the year it was close to $3.82/gallon. Business owners and consumers had to look at

their spending consciously because gas was on the rise this year and it was not in their favor.

4 http://www.washingtonpost.com/politics/federal-‐government-‐shutdown-‐cost-‐2-‐billion-‐in-‐lost-‐productivity-‐omb-‐report-‐says/2013/11/07/e883c3ec-‐47f2-‐11e3-‐bf0c-‐cebf37c6f484_story.html 5 http://www.forbes.com/sites/prospernow/2013/07/31/rising-‐gas-‐prices-‐influence-‐consumers-‐spending/


Figure 36

As far as government spending in 2013 the national deficit keeps increasing. It is currently at it’s

all time high at $16.9trillion. The Congress is said to borrow approximately $0.19 for every

$1.00 that they produce for the government. Tax revenue has been on the verge of returning

back to normal. Although this is occurring government spending is continuing to grow at

exponential levels that is creating infamous history in the U.S.7

6 http://www.heritage.org/research/reports/2013/08/federal-‐spending-‐by-‐the-‐numbers-‐2013 7 http://www.heritage.org/research/reports/2013/08/federal-‐spending-‐by-‐the-‐numbers-‐2013


2014

Figure 48

Figure 59

In 2014 the U.S. is continuing to recover from the shutdown that occurred the year before.

People still do not feel safe with spending their money after the government came from such

an unstable time. An example is that people will continue to eat at their home instead of going 8 http://www.gallup.com/poll/180401/consumer-‐spending-‐strong-‐mostly-‐unchanged-‐december.aspx 9 http://www.gallup.com/poll/180401/consumer-‐spending-‐strong-‐mostly-‐unchanged-‐december.aspx


out to “wine and dine.”10 When referring to Figure 1 GDP did increase so the economy is still

performing at a good level. Consumer spending was consistent with last year’s numbers besides

Quarter 1. During this time The United States had a massive set of extreme winter weather

conditions that were not normal for the area. This affected production by places getting closed

down due to the conditions. After the winter season passed consumer spending went back to

normal and surpassed 2013’s consumer spending, which is positive news. Consumers are now

starting to trust their government more by spending more on goods and services amongst the

country. You can see this in Figure 4 by the upward trend that in taking place. In Figure 5, after

winter season ended consumer spending for both low income and high income consumers both

increased in consumer spending so weather definitely had an impact on spending in 2014.

10 http://news.stanford.edu/news/2014/september/shutdown-‐siepr-‐paper-‐092514.html


Figure 611

In regards to government spending it is similar to 2013 just slightly lower. After the introduction

of the Budget Control Act, the total spending has decreased immensely saving a lot of money

for the country. This has been in use for two years and that is another factor as to why the

GDPs for the past two years have also been similar in that category.

11 http://www.heritage.org/research/reports/2014/12/federal-‐spending-‐by-‐the-‐numbers-‐2014


2015 Q1

Figure 712

In the first quarter of 2015 consumer spending did not go up as expected by the increase in

wages across the country.13 Although this happened there are projections that there will be an

increase in the coming months of 2015 for consumer spending due to the wage increase. When

looking at Figure 7 this was the smallest change in the past 3 years but hopefully this will

change. The severe winter weather conditions again did have a huge impact on consumer

spending these last few months, just like they did in 2014. So economists’ predictions should be

correct based on the positive outcome that occurred last year in 2014. In the latest news GDP

was 0.7%. This was due to multiple factors but the bigget was the impact the US strong

currency had on the decerase of exporting goods which is the major calculation for GDP. The

weather for Q1 also disrupted the importing and exporting of goods for the United States.

12 http://www.gallup.com/poll/181769/february-‐consumer-‐spending-‐level.aspx 13 http://www.ibj.com/articles/52492-‐us-‐consumer-‐spending-‐edges-‐up-‐on-‐income-‐increases


Unemployment Level

Figure 814

2013

Refer to Figure 8. When looking into 2013 the unemployment rate is still steadily going down

from the previous years, it is 6.7% by the end of December. 182,000 jobs were added15 to the

job market, which was slightly lower than 2012 but significantly higher than 2011. This shows

that the economy is still going in the right direction of having an almost fully employed country.

The less unemployed people that are in the country, the more consumer spending occurs. This

also increases the production levels in companies because more people are getting hired to do

more exports for the country. This is a positive outlook into the Future for the U.S. The Fed will

just keep a look at this as a factor to increase the Fed rate, which will be later discussed.

14 http://www.tradingeconomics.com/united-‐states/unemployment-‐rate 15 http://www.ibtimes.com/us-‐jobs-‐report-‐december-‐2013-‐unemployment-‐rate-‐drops-‐67-‐nonfarm-‐payrolls-‐big-‐miss-‐wont-‐affect-‐fed


2014

In 2014 when still referring to Figure 8, the unemployment rate is still decreasing at a steady

pace. It is currently at 5.8%.16 This is a good outlook for the U.S. That means more people are

getting added to the labor force and production is still increasing. This will be a great impact on

GDP to add more exports to the country. This will make businesses more profitable and

consumers more satisfied.

2015 Q1

Some information still has not been released yet for the first quarter of 2015. But from the

information that we have received so far the outlook is looking positive for 2015.

Unemployment percentages are still decreasing. We are currently at 5.5%, so we are getting

closer to being a fully employed economy.17 This is great news for the economy because then

most of the people in the United States are involved in the nation’s labor force. That means less

people are likely to be homeless and production should be increasing along with that. This will

positively affect our GDP’s growth in the coming months, hopefully in a more influential and

positive way like it should.

16 http://www.usnews.com/opinion/economic-‐intelligence/2014/12/10/unemployment-‐rate-‐hides-‐who-‐the-‐jobless-‐really-‐are 17 http://www.bls.gov/news.release/empsit.htm


Interest Rates/Housing Market

2013

In 2013 bank rates were raising that caused stress in the financial world. In May 2013-‐June 2013

10-‐year Treasury rose from 1.63% to 2.72%.18 Rising yields are an indicator of a growing strong

economy but this quick pace caused panic. Due to these rates increasing this would influence

the housing industry. People will not want to buy houses when interest rates are rising. So

instead they would wait to see if the rates would get any lower before investing and making the

most out of their money. This can also affect the Stock Market because investors will now be

making less profit with interest rates growing due to their return decreasing. So they would

look elsewhere to invest their money if rates kept increasing in the country. Equities would also

be another source of income better suitable for investors at this time.19

2014 and 2015 Q1

Now when talking about the Fed rates, they have been low for a long period of time. They have

been close to around 0% since the crisis in 2008. In 2014 it was no different, although now it is

expected that the Fed won’t raise rates in the government not until as early as summer of

2015.20 With the rates being so low the economy has been progressing immensely but this will

soon cause fear in the economy because the rates have been low for too long. They have been

trying to keep the rates low so people can invest more in the country as an incentive to recover

faster from the 2008 U.S. financial crisis. The plan has been working so far but what will happen

in 2015 will make the markets and economy shift if the Fed is planning to increase the fed rate 18 http://www.forbes.com/sites/mikepatton/2014/05/27/how-‐rising-‐interest-‐rates-‐could-‐affect-‐your-‐portfolio/ 19 http://www.forbes.com/sites/steveparrish/2013/08/20/what-‐happens-‐if-‐interest-‐rates-‐go-‐up/ 20 http://money.cnn.com/2014/09/17/news/economy/fed-‐interest-‐rates-‐janet-‐yellen/


this coming summer. There are only a few positive sides to an increasing. It would indicate an

improving economy, while avoiding hyperinflation and stabilizing growth.21 So either way the

U.S. looks like they are in good hands with the Fed seeking different routes with their Fed rates

and the growth of the US.

Currency/Level of Inflation

Figure 922

21 http://www.post-‐gazette.com/business/money/2014/12/15/2015-‐Interest-‐Rate-‐Projections-‐Here-‐s-‐how-‐rates-‐will-‐affect-‐your-‐money-‐next-‐year-‐personal-‐finance-‐investment/stories/201412150011 22 http://fx-‐rate.net/USD/EUR/#graph


2013

Figure 1023

In 2013 CPI has increased overall and that is a good because it shows that there is positive

activity going on in the country and that has a positive outcome on GDP. The inflation is not too

high so there are no signs of hyperinflations and they are consistent with previous numbers. In

the energy and gasoline industries the numbers are negative because of the decrease in prices

for the year. Gasoline and Energy industry are parallel to each other and this is indicated in

Figure 10.

23 http://www.econedlink.org/lessons/index.php?lid=1161&type=student


The USD is also still increasing and becoming a stronger currency in the market. You can

reference Figure 9 when looking at the USD for 2013-‐2015(Q1) when being compared to its

Euro dollar competitor. The USD has become stronger as the time has passed between 2013

and now and the U.S. economy is now starting to feel the side effects of this. Even though the

currency is becoming a stronger asset in the market, this can have both a positive and negative

impact on the country. People will travel more and spend more money on foreign items

because their money is can now be spread out more in the foreign economies. On the other

hand, this can have a negative impact on both the economy that then impacts the GDP of the

US. Around 70% of GDP falls under consumer spending. By the currency becoming stronger less

people from outside of the U.S. will invest in our currency because it is too expensive. There will

be a decrease in foreigners spending money on our goods and services for the same reason.24

This is not good for our economy because we are still trying to recover from the 2008 recession.

If foreign markets do not adjust their exchange markets then the Fed will have another

incentive to raise their rates. They already see that the U.S. is reaching full employment and

inflation is increasing at a slow pace. 25 So a stronger USD will add more fear into a newly

recovering economy. It is also advised for investors to move their money into more mid and

small-‐ cap stocks to have less risk in their portfolio. Including that, it would be safer to invest in

mutual funds and exchange-‐traded funds.26 In the end, it is always best to keep the portfolio

diverse by investing in all varieties because the USD can also do the opposite and become

weaker in the near future.

24 http://www.cbsnews.com/news/how-‐will-‐a-‐strengthening-‐dollar-‐affect-‐the-‐us-‐economy/ 25 http://www.cbsnews.com/news/how-‐will-‐a-‐strengthening-‐dollar-‐affect-‐the-‐us-‐economy/ 26 http://money.usnews.com/money/personal-‐finance/mutual-‐funds/articles/2015/04/14/how-‐a-‐strong-‐dollar-‐could-‐affect-‐stocks


2014 and 2015 Q1

In 2014 and early 2015, inflation has continued to decrease. It started at 1.5% in 2013 and then

decreased to 0.07% in 2014.27 After the passing of Operation Twist and Quantitative Easing

program starting in 2011 and 2012, the country’s inflation has been decreasing over the years,

which is a really good thing for a recovering economy. By inflation decreasing, money will be

used to buy more items in the economy. Consumers can buy more items and this will help

stimulate the economy even more, especially since it is still recovering. By consumer spending

more money and stimulating the economy the GDP will get stronger, demonstrating a stronger

economy.

27 http://inflationdata.com/inflation/inflation/annualinflation.asp


Stocks

Figure 1128

Year-‐Over-‐Year Turn Over29

S&P 500 (Blue) DJIA (Red) Russell 2000

(Purple)

NASDAQ (Green)

2007 3.53% 6.4% -‐2.75% 9.8%

2008 -‐38.49% -‐33.8% -‐34.80% -‐40.5%

2009 23.45% 18.8% 25.22% 43.9%

2013 32.39% 26.50% 38.82% 40.12%

2014 13.69% 7.52% 4.89% 14.75%

28 http://finance.yahoo.com/echarts?s=%5EGSPC+Interactive#%7B%22range%22%3A%2210y%22%2C%22scale%22%3A%22linear%22%2C%22comparisons%22%3A%7B%22%5EDJI%22%3A%7B%22color%22%3A%22%23cc0000%22%2C%22weight%22%3A1%7D%2C%22%5EIXIC%22%3A%7B%22color%22%3A%22%23009999%22%2C%22weight%22%3A1%7D%2C%22%5ERUT%22%3A%7B%22color%22%3A%22%23ff00ff%22%2C%22weight%22%3A1%7D%7D%7D 29 Professor Amy Kratchman


2013 – 2015 Q1

The U.S. economy has come a long way from the recession that it hit in 2008 as you can see

above in both Figure 11 and in the table. All four markets have recovered within the first year

and are continuing to recover. In 2014 you see a dip in the total annual return. A valid

explanation for this is that the USD is becoming a stronger currency. A huge indicator of this is

when comparing the U.S. markets to foreign markets that are heavily influenced by U.S. trade,

for example the European or Asian/China’s markets. Those markets’ numbers have been very

volatile since the increase of the USD’s strength. This can have a negative impact on the

markets. Investors are adjusting their funds to better protect their capital. So companies are

also adjusting to this change in a stronger currency. Despite the low year-‐over-‐year total return

all four markets are still going in the upward trend. Additionally, it is said that S&P’s returns are

barely getting affected by the strengthening of the dollar.30 All 4 markets are following the

same trend so you can virtually say that for all four markets. Although I still think it is too early

to see if the markets are being greatly affected by this. Companies should still be precautious

and aware that the strengthening of the USD is making change in trade amongst the nations.

It’ll be too late if you see the markets are being affected by this change in the future.

Default risk and Overall Credit Quality31

When looking at the years 2013 and 2014 the default risk and credit quality has changed greatly,

so we will be analyzing these numbers in this section. In 2013 the default risk was shown to be

30 http://www.forbes.com/sites/laurengensler/2014/10/01/what-‐a-‐stronger-‐dollar-‐means-‐for-‐stocks/ 31 http://www.nact.org/resources/2014_SP_Global_Corporate_Default_Study.pdf


81 but when looking at 2014, it has decreased to 61. This in turn made the global speculative-‐

grade default rate decrease from 2.28% to 1.42% in 2014. The reason this had occurred was

from the increase in the number of speculative-‐grade issuers in 2014, and there was also a low

number of defaults. They issuers had increased from 2,804 to 3,163 that year.

The one-‐year global Gini ratio had increased to 93 in 2014, making it the second highest in 34

years. This shows the impact the credit quality had since it influences over 90% of the ratio. The

credit quality in 2014 had been a “B-‐ or lower”, and the overall rating of ratings had decreased

the same year. The downgrade rate had decreased from 2013’s 9.4% to 8.4% in 2014. And the

upgrade rate had also made a fall from 2013 to 2014 by going from 11.4% to 9.3%.

The U.S. has hit its lowest percentage in the past 34 they still remain on the top for holding the

most defaults globally at 55% in 2014. Then coming behind them are the emerging markets,

counting for roughly 25% of remaining global defaulters.

Interest Rates and the Economy’s Future

There has been some factors and past evidence that make people assume that interest rates

will increase in the latter part of 2015, but I believe otherwise. I believe that the interest rates

will stay the same for atleast another year. I think that the Federal Reserve is afraid to increase

rates because the economy has been doing so well from the rates being near 0. They want the

U.S. economy to flourish more since we took such a hard hit in 2008/2009. As stated in the


economic analysis section, inflation rates have been increasing slowly, while unemployment

rates have decreased along with stock prices increasing. Since they are doing this it may be

going on for too long. The interest rates may stay low for too long and cause problems in the

economy. This can cause recessions and “double-‐dip recessions, and this may be a potential for

the U.S. economy as well. Our clients cannot afford to lose money since they have huge

investments to make in the near future. So I think that it will be appropriate to invest in an

intermediate stock. I will be looking into a stock that is around 10 years long due to the rates

being so low for much longer. Also the option of buying a convertible bond will be analyzed. So

if the economy does continue to improve then the bond can convert into a stock for the

Kratchman Family to receive a greater return.

Investment grade was chosen over a high yield because it is less risky. Also when looking at the

past return that risk that high yield held was not worth the return it was making when

compared to investment grade. The investment grade area made much higher and more

consistent returns in the past years and that is why we will be looking in this area. In addition,

BB-‐ rating range is what I will be looking into for bonds because they are stable and show that

the company is coming from a stable, strong economy.


Asset Allocation We are going for a more moderate/conservation approach for the Kratchman Family asset allocation. Asset Allocation

Large&Cap&Equity18%

Mid&Cap&Equity9%

Small&Cap&Equity9%

US&Treasury10%

Investment&Grade&Corporate4%

High&Yield&Corporate0%

Municipal&Bonds6%

Developed&International8%

Emerging&International14%

Specific&Commodity5%

Specific&Commodity10%

Real&Estate0%

Cash&/&Risk&Free&Asset7%

Percentage)Invested


Cash I advise for the Kratchman family to have 7% invested in this section since at their age they have a lot of responsibilities. A lot of things can occur in their family where they will need to make money liquid in order to use it quickly. They have two children and accidents are bound to happen at all of these ages. Putting 15% in cash along with saving 15% monthly will keep the Kratchman family safer and feel more comfortable with the money that we allocate into the other sections of their portfolio for the future.

Domestic Equity They should invest around 36% total in the total domestic stock market. This will be spread out in to three major sections of the area. There will be 9% put into mid and 9% small cap equities since they tend to be more volatile and unpredictable. We put 9% into the large cap equity since they are more stable stocks in this area. This will give the family a better return for their investment.

Bonds Bonds will give the Kratchmans a constant return of money over the rest of their investment period. That is why we are allocating 20% into this market. We have not invested in the high yield area because they have been receiving negative returns and that is not what we want in this portfolio. Through this we are putting 10& in US Treasury, 4% in Investment Grade Corporate and 6% in Municipal Bonds. We are putting the most in US Treasury because they had a highest return when compared to the other bonds when look at the 20 year average return.

International Exposure International exposure is always a great way to diversify a portfolio. We are putting 22% in this area with 14% going into the Emerging International. There is a lot of potential in the emerging markets and this is a great time to invest in such a highly influential area. 8% is going into the developed markets because these markets are more stable and they will make a consistent return. They do not make as high of a return so more money is being invested into the emerging markets area.

Commodities As for commodities we are investing a total of 15% with 10% going towards Oil. Right now oil is very low so this will be a good time to invest. The prices will go up again and when they do we will make a great return. Gold is only getting 5% because it is always a good safe commodity to join but their returns aren’t as high as we want them to be.

Real Estate We are investing 0% in this market because they are still an unstable market to look into especially after the slow recovery it is getting after the great recession in 2008. They may have a positive outlook into the future but for now the money will be getting allocated into other areas that are more promising for the Kratchman family.


Current Holding Assessment

TWX Time Warner has done well over the past 21 years that the Kratchman Family has held the stock.

They have made a cumulative of 653% that folds the company’s stock over 6 times since the

price that it was invested with on the original day. The Return of the stock has been 30.96%

while holding a risk of 47.19%. After looking into this stock and seeing what the family needs I

would advise to drop this stock. Even though they have done exceptionally well this stock holds

too much risk for the return that it is making. When you break down the cumulative return of

the stock they only make 31.09%, which is a lot lower than the risk. We want to use a stock that

has a higher return than the risk dealt out in the company so it is advised to drop this stock in

the portfolio.

TWC Time Warner Cable has also done well over the past 6 years since the spinoff that occurred

from Time Warner. They have made a cumulative of 200% with folds the company’s stock over

twice times since the original day. The Return of the stock has been 33.36% while holding a risk

of 25.33%. After looking into this stock and seeing what the family needs I would advise the

family to definitely keep this stock. The risk of the return is very low when compared to the

other sticks that the Kratchman family hold and they also hold the highest return when the

cumulative is broken down year by year. When you break down the cumulative return of the

stock they make a return of 33.33%, which is a lot higher than the risk. TWC perfectly

exemplifies a stock that we want to use that has a higher return than the risk dealt out in the

company so it is advised to keep this stock in the portfolio.


DLTR Dollar Tree has done well over the past 16 years since the time the Kratchman Family originally

held this stock. They have made a cumulative of 350% with folds the company’s stock over 3.5

times since the original day. The Return of the stock has been 21.90% while holding a risk of

35.48%. After looking into this stock and seeing what the family needs I would advise the family

to definitely keep this stock. Even though the risk of the stock may seem to be high this stock is

stable, especially when compared to TWX. That is why I advise to keep this stock rather than

TWX. When you break down the cumulative return of the stock they make a return of 21.88%,

which is still good. DLTR is a safer stock and should be kept in the Kratchman family’s portfolio.

They are also about to go through their biggest acquisition ever. They are acquiring

FamilyDollar, which will make huge improvements to this company.

Commercial Paper Commercial Paper has done poorly in the past 16 years since the Kratchman family invested in

it. They first invested in this company with $5000 and in the past 16 years the price has been on

a constant decline. It is now priced at $3,495 making it a loss of over $1,000. The value of the

stock is high at $116,074.16 and is not a risky asset, although it is advised to not keep this in

their portfolio. The family can use this money to either invest in other areas of their portfolio or

keep it in their savings.


Implementation Microchip Technology Inc. (MCHP) When we were contemplating which bond to add to our portfolio, we decided that they should belong to staple industries important to everyday consumption. The focus company is Microchip Technology Incorporated in the Specialized Semiconductor Industry. They are the leading provider of microcontroller, mixed-‐signal, analog and Flash-‐IP solutions.32 They will be the company to buy a bond from. The company has a Price-‐to-‐Earnings ratio of 28.72, which is lower than the industry average of 53.50. You want the number to be lower than the industry’s so this is a great indicator. When looking into what company to do technology immediately comes to mind. It is nearly impossible to find an electronic device or machine that does not require a microchip. Companies are always trying to develop the next big thing in technology. The Microchip market has evolved along with innovation buy creating microchips with different sizes and capabilities to help the industry grow. Regardless of how new innovations shape technology, microchips have become a staple in the market. The top executives have also made great strides to encourage growth of the firm within this industry.

Microchip Technology Inc. MCHP Valuation Ratios33

Market Cap (intraday): 9.85B Enterprise Value (Feb 11, 2015): 9.88B Trailing P/E (ttm, intraday): 28.62 Forward P/E (fye Mar 31, 2016): 16.8 PEG Ratio (5 yr expected): 1.41 Price/Sales (ttm): 4.6 Price/Book (mrq): 4.27 Enterprise Value/Revenue (ttm): 4.71 Enterprise Value/EBITDA (ttm): 13.7

Industry: Semiconductor-‐ Specialized

Industry P/E: 53.5

32 http://finance.yahoo.com/news/volvo-‐cars-‐upgrade-‐microchips-‐most150-‐120300596.html 33 http://finance.yahoo.com/q?s=MCHP


Market Share

Figure 12 34

When referring to Figure 12, you can see that MCHP is the leader in holding 64% of the microcontrollers within the semiconductor industry. This is a great indicator because this is the main part of the semiconductor industry and they are on top by holding most of the market share in this area. Then they hold 23.74% of the analog interface products, but that is not bad since their competitor is Texas Instruments, who specify in this area, unlike MCHP.

34 http://csimarket.com/stocks/competitionSEG2.php?code=MCHP


Current Events

Always looking to expand and grow their company. In 2009 MCHP, acquired a privately owned R&E International to improve their integrated circuit systems.35 It is also expected in Q3 2015 that MCHP will be buying another semiconductor company Micrel.36 It was also recently announced that Volvo will be using their OS81110 Intelligent Network Interface Controllers (INICs) in their new Volvo XC90 model.37 They are also one of the top technology companies that are earning “double digit profit growth.” You can refer to Figure 13 below. They had the highest forward price-‐to-‐earning-‐ratio in the semiconductor industry. Also they hold the second highest growth when analyzing and comparing the tickers across the board. By MCHP looking to acquire other semiconductor companies, they are looking nowhere but upwards. Expansion and innovation is what they focus on in their company. They want to be the leaders in this sectors and our data proves this.

Figure 13 38

35 http://www.microchip.com/newsandevents.aspx 36 http://www.marketwatch.com/story/microchip-‐technology-‐to-‐buy-‐micrel-‐2015-‐05-‐07-‐18103148 37 http://finance.yahoo.com/news/volvo-‐cars-‐upgrade-‐microchips-‐most150-‐120300596.html 38 http://www.marketwatch.com/story/some-‐technology-‐companies-‐still-‐boast-‐double-‐digit-‐profit-‐growth-‐2015-‐03-‐24?page=2


Bond

39 When investing in MCHP we will be buying the Microchip Tech 144A Cv 1.625%. This will be the best option for our client given their credentials. S&P gives this company a “BB-‐” rating which is perfect. When comparing this rating to the Barclay’s benchmark, this indicates that the company is coming from a strong economy. It also signifies that MCHP is a stable company to invest in. When choosing which type of bond to use we decided to choose the convertible bond rather than a regular bond that doesn’t convert. Even though it was a bigger investment, this will give our client more options in the future. MCHP looks like they have a lot of potential and growth in the future for their company. If the right opportunity and time comes, the bond can be converted into a stock. This will give the family a chance to to gain more money and then earn dividends in their investment to MCHP. This will give the Kratchman family more options and feel stable by investing in a bond that gives payments out now semi-‐annually, and then can potentially change over into a stock if the company shows potential in the future.

Exchange Traded Funds When looking at what other bonds to invest in we chose to look in ETFs that are indexed as our fixed income rather than actively managed funds. We had chosen this route because ETFs are less risky of an investment to handle. Since you are also following indices there is less volatility since multiple companies and sectors are involved in these indices. There are also less fees to deal with when handling ETFs and saving money is always a positive, especially with our client.40 When saving money you can allocate that money to either being saved or further and more efficiently invested in another part of the portfolio. When looking further into ETFs we had used http://www.etf.com (Figure 3) as a filtering tool to see what bonds would populate after entering in the credentials we wanted. We ended up finding two perfect matches for the Kratchman Family after the research was completed with the following credentials that you see again in Figure 14.

39 http://quicktake.morningstar.com/stocknet/bonds.aspx?symbol=mchp 40 http://www.cnbc.com/id/102277366


Figure 14

iShares 7-‐10 Year Treasury Bond ETF (IEF)

This bond was chosen because it fit perfectly into the credentials we were looking for. This bond will mature within 7-‐10 years and that is perfect for the economy we are in and it is in the intermediate category. Interest rates will remain low so this will be a good investment for the family. This will also be stemming from the U.S. Treasury Market that is also a stable area to invest in.

Intermediate Municipal Index ETF (ITM)

As for the municipal bond ITM will be the best option for this family. This is also in the intermediate time frame of 11 years, which is good because of how interest rates are going in the domestic economy right now and in the near future. Municipal bonds are also a great investment, especially since they are tax-‐free. So that is another cost that you can cut away and invest somewhere else in the portfolio or save.


Large cap ($5B or higher)-‐ 18%

PepsiCo (PEP)-‐ 5%

PepsiCo is one of the most well known companies form around the world. They produce a

multitude of consumer good products for many years and they are going nowhere but up.

Consumer goods are always a great investment to make because they do well during all parts of

the business cycle. So if an economy is going through a recession, people will still go out and

buy these products because they are a staple in the household.

Their main competitor is Coca-‐Cola but PepsiCo is known to be the better investment in the

financial world. In the past year PepsiCo’s stock rose by 22% while Coca Cola’s stock price only

rose by 12%.41 That should be a huge indicator that PepsiCo is expanding and growing at a

much faster rate than its top competitor. PepsiCo was also at an all time high with their stock

price at $100 in the 2014 Q4 data. With that they plan on giving between $8.5 and $9 billion

back to their shareholders, which is a great indicator that their company is very stable and

progressing a a very high rate right now.42

As far as dividends, PepsiCo has been known to give out dividends and it has been going on for

over 40 years. Dividends are a great indicator for a company because then that means that

their company is doing so well that they can afford to pay out dividends to their investors.

PepsiCo has a very strong cash flow and this proves why they are a great company to invest in.

They are also the leaders in the snack industry and hold 22 “billion-‐dollar” snack companies, so 41 http://moneymorning.com/2013/12/13/why-‐pepsico-‐nyse-‐pep-‐stock-‐is-‐the-‐real-‐no-‐1/ 42 http://www.fool.com/investing/general/2015/02/15/why-‐you-‐cant-‐afford-‐to-‐ignore-‐pepsico-‐stock-‐in-‐201.aspx


each company makes a profit of atleast $1 billion that is something Coca Cola cannot say about

themselves since they only hold 20. 43

It is predicted that PepsiCo will also have a stronger outlook in 2015. They are projected to

grow 7% in the earnings per share growth. Then if their P/E ratio stays around 21.62 then their

dividend should be at 2.7%. This will then entice that the shareholders should expect a total

return of 9-‐10%. This will be great and overall will be higher than Coca Cola.44 This company is

overall a great investment and their innovation ad forward h=thinking mentally will make this a

great choice for this portfolio for the Kratchman family.

Apple (APPL)-‐ 5%

Apple will be a great investment to make. 5% will be allocated in this company’s stock. This

company has improved immensely over the years since it’s IPO. You can see this in the picture

below. They are an extremely innovative company that adapts to change and it always looking

for room for improvement. They try their hardest in expending their customer base and from

this Apple has been spreading their company into other sectors to add to their competitive

edge. They give out dividends so this is a great sign that Apple is a stable company. They have

acquired one of the largest audio companies, Beats, which extended them into the audio sector

of the market. They have also seen that there is a new market of online music streaming and

Apple will be releasing another product of their own at the end of June 2015, Apple Music, that

43 http://www.fool.com/investing/general/2015/02/15/why-‐you-‐cant-‐afford-‐to-‐ignore-‐pepsico-‐stock-‐in-‐201.aspx 44 http://www.thestreet.com/story/13043245/2/pepsico-‐vs-‐coca-‐cola-‐which-‐stock-‐is-‐the-‐better-‐choice-‐for-‐2015.html


will compete against the top music streaming services, including Tidal, Spotify, and Pandora.45

Apple has also introduced their Apple watch which spread them into another sector of

technology. Apple is a company that you don’t want to pass and this is only the beginning for

Apple. They continue to improve themselves to become the leaders in every sector that they

join.

46

Time Warner Cable (TWC)-‐ 5%

Previously stated in the Current Holding Assessment section

DollarTree (DLTR)-‐ 3%

Previously stated in the Current Holding Assessment section

45 http://www.forbes.com/sites/julianmitchell/2015/06/09/wwdc-‐2015-‐the-‐hidden-‐strategy-‐that-‐gives-‐apple-‐music-‐the-‐edge-‐over-‐its-‐competitors/ 46 http://money.cnn.com/2015/03/03/investing/apple-‐stock-‐make-‐money/


Mid cap ($1B -‐ $5B)-‐ 9%

Trinity Industries (TRN)-‐ 5%

5% will be invested in this company. They specialize in a multitude on industrial products that

have been used in various companies over the years. They have aslo recently acquired Meyer

Steel Structures for $600 million47, showing that they are looking to expand and improve their

company over time. There is great potential future growth for this company and they are also

well diversified into 5 different sectors. Their valuation measures are great, with a P/E ratio of

7.29, that is high and a great indicator for this company. They are the leaders in the electric

transmissions towers and they plan to be the leaders in the 4 other sectors they are involved in,

in the near future.

Boston Beer (SAM)-‐ 4%

Alcohol is known to always do well in the economy through all parts of the business cycle. It is a

product/industry that withstands and gets through the roughest times while other industries

may suffer greatly. That is why we will be investing 4% in Boston Beer. This company has been

around for many years and they are one of the top producers in this industry. Despite their

prices falling by 9% this is a great company to invest in. They have increased their marketing by

investing $45 million into that department, to gain more customers this year to have more of a

competitive edge against their leading competitors. It is also predicted that this company will

be bough by their main competitor, Anheuser-‐Busch InBev (BUD), which will make their stock

47 http://investorplace.com/2014/09/mid-‐cap-‐stocks-‐to-‐buy/view-‐all/#.VXEcTGCsCXM


increase to over $300.48 Currently the stock price is around $250 so this will be a great

investment to make right now before they get bought out.

Small cap ($1B or lower)-‐ 9%

IPG Photonics (IPGP)-‐ 5%

We will be investing 5% in this company because they are the top leaders of their sector. They

control around 70% of their market and this is a great indicator for investing in this company.

Fiber-‐optic lasers are what they produce in this company and demand for this product will be

on the rise in the coming years because of the advanced technology it holds. Automobile

companies are their main customers and as they convert to more high-‐tech appliances in their

manufacturing areas, this company will go only upwards because of the demand that they are

receiving for their product. They have been reducing costs immensely and it has been recorded

that they have dropped from $85 to $5 cost per watt.49 The company’s price share has also

increases by $17% ($53-‐ expected $70) within weeks and this shows how much interest is in

this company. This is a great time to invest in IPGP before they become even more expensive in

the future.

1. iRobot Corp (IRBT) http://www.forbes.com/pictures/mee45edfe/irobot-‐corp/

IRobot will be getting 4% of our investment share. Their share price rose by 33% in the last year

and they continue to rise. Many companies and households are going towards using robots

right now and this company specializes in this area. This type of technology is emerging quickly

48 http://investorplace.com/2014/09/mid-‐cap-‐stocks-‐to-‐buy/view-‐all/#.VXEcTGCsCXM

49 http://www.forbes.com/pictures/mee45edfe/ipg-‐photonics/


in the world and this is the right time to invest in this sector. 60% of iRobot’s revenue stems

form home robots and then the rest goes into military robots.50 They are gaining their revenue

in the top two areas of the robot industry and they are in high demand right now. It is

estimated that the stock price will rise from around $32 to $43 which is a great improvement.

There is no better time than now to invest in this company and that is why they will be included

in this well diversified portfolio.

International-‐ 22%

Developed-‐ 8%-‐ iShares MCSI United Kingdom (EWU) ETF (United Kingdom Region)

8% will be invested in the United Kingdom’s ETF. We will be going into this area because this

region has been one of the leading ETF’s for developed countries. You can refer to the picture

below to see that they are ranked #2 in the whole world only coming behind Argentina, who is

a very unstable country to invest in. This ETF was chosen because that are the main and largest

ETF for the United Kingdom and so it will be the best fund to look into for this region.51 The

currency is one of the strongest on the whole world and they are one of the oldest established

countries sin the world. They are targeted to 85% of the market in the United Kingdom, and are

made up of mostly mid and small cap stocks, while also holding the title of being one of the

best international developed ETF, that is non-‐US. 52 They have the most experience and

knowledge and this stable economy will be best for the Kratchman family to invest in.

50 http://www.forbes.com/pictures/mee45edfe/irobot-‐corp/

51 http://finance.yahoo.com/news/jolly-‐good-‐time-‐u-‐k-‐113018157.html 52 http://www.ishares.com/us/products/239690/ishares-‐msci-‐united-‐kingdom-‐etf


53

Emerging-‐ 14%-‐ iShares MCSI BRIC (BKF) Do BRIC ETF

Emerging markets are an extremely hot topic right now in the investment and international

business world. BRIC has become a term that all investors know and this portfolio is not missing

out on this opportunity. 14% will be invested in the BRIC ETF. The Kratchman family will not

regret this decision because they will be making a lot of profit from this sector. Since 4 major

countries are involved in this ETF they will help each other in progressing in the market.54 So if

one country does poorly in one quarter, another country will help the ETF so that is does not

fail all-‐together. So this ETF is a portfolio in itself from it having multiple regions in it. The

53 http://www.etf.com/etfanalytics/etf-‐finder

54 http://www.ishares.com/us/products/239614/ishares-‐msci-‐bric-‐etf


overall rating for this ETF is a B and that is great for this family.55 This shows that the ETF is

coming from stable economies and this is perfect.

Specific Commodities-‐ 15%

Gold-‐ 5%

We will be investing 5% in the SPDR Gold ETF. Gold is always a good commodity to hold onto.

They are a safe asset in any portfolio and this ETF is the closest way to invest in gold itself. This

ETF also has an A rating and that is extremely good for the family for investing because this

means this ETF is very tradable, efficient and fit for investing at this moment. Also at this time

Greece is going through a very hard time in their economy and one of the best things to invest

in right now is gold. A large part of the euro zone will be investing in commodities such as gold

because of the chance that Greece might default, or restructure themselves at the least.56 Gold

is the best way to protect their money, and before this happens, now is a good time to invest

some of this portfolio into this ETF.

Crude Oil-‐ 10%

We will be investing 10% into the USO ETF. This is the best ranked Oil ETF with the most

stability. Right now it has a B rating and that is great for the Kratchman family. They are the

most liquid and largest ETP for this sector and that is a great indicator.57 This is coming form a

stable economy, the United States and this is a good time to invest. Right now Oil prices are low

55 http://www.etf.com/BKF 56 http://www.forbes.com/sites/greatspeculations/2015/06/04/three-‐things-‐to-‐buy-‐after-‐greece-‐restructures-‐or-‐defaults-‐on-‐its-‐debt/2/

57 http://www.etf.com/USO


so this will be prime time for investors to buy up these ETFs, so that when they go back up they

will gain profit.

Cash/Risk Free Asset-‐ Choose MMF-‐ 7%

Vanguard Prime Money Market Fund (VMMXX)

Cash is always a great investment for a portfolio. It provides security and it is the most liquid

asset to have. 7% will be invested in this section of the portfolio and this will go towards the

Vanguard Prime Money Market Fund. Vanguard is one of the top investors when it comes to

this sector and this find is one of their top performers.58 59 It is very low risk so money will make

little profit but it will be very stable and that is what we want in this section of the portfolio.60

58 http://www.theskilledinvestor.com/wp/best-‐money-‐market-‐funds-‐259.htm 59 http://quote.morningstar.com/fund/chart.aspx?t=VMMXX&region=usa&culture=en-‐US 60 https://personal.vanguard.com/us/funds/snapshot?FundId=0030&FundIntExt=INT#tab=0


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"Some Technology Companies Still Boast Double-‐digit Profit Growth." MarketWatch. N.p., n.d.

Web. 28 May 2015. <http://www.marketwatch.com/story/some-‐technology-‐

companies-‐still-‐boast-‐double-‐digit-‐profit-‐growth-‐2015-‐03-‐24?page=2>.

"The 2013 Government Shutdown Affected Federal Workers and the U.S. Economy, Stanford

Economist Says." Stanford University. N.p., n.d. Web. 17 Apr. 2015.

"The Top 40 Best Low Cost US Money Market Funds." Personal Investment Management and

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Magazine, n.d. Web. 09 June 2015.

<http://www.forbes.com/sites/greatspeculations/2015/06/04/three-‐things-‐to-‐buy-‐

after-‐greece-‐restructures-‐or-‐defaults-‐on-‐its-‐debt/2/>.

"Time to Dump Your Actively Managed Mutual Funds?" CNBC. N.p., 06 Jan. 2015. Web. 28 May

2015. <http://www.cnbc.com/id/102277366>.

"U.S. Consumer Spending Edges up on Income Increases." U.S. Consumer Spending Edges up on

Income Increases. N.p., n.d. Web. 17 Apr. 2015.

"U.S. Consumer Spending Strong, Mostly Unchanged in December." U.S. Consumer Spending

Strong, Mostly Unchanged in December. N.p., n.d. Web. 17 Apr. 2015.

"U.S. Economic Accounts." U.S. Bureau of Economic Analysis (BEA). N.p., n.d. Web. 17 Apr. 2015.

"United States Unemployment Rate | 1948-‐2015 | Data | Chart | Calendar." United States

Unemployment Rate | 1948-‐2015 | Data | Chart | Calendar. N.p., n.d. Web. 17 Apr.

2015.

"US Jobs Report December 2013: Unemployment Rate Drops To 6.7%, Nonfarm Payrolls A Big

Miss But Won't Affect Fed Tapering Time Table." International Business Times. N.p.,

10 Jan. 2014. Web. 17 Apr. 2015.

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2015. <http://www.etf.com/USO>.

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<https://personal.vanguard.com/us/funds/snapshot?FundId=0030&FundIntExt=INT#tab


=0>.

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Inv Fund Chart. N.p., n.d. Web. 09 June 2015.

<http://quote.morningstar.com/fund/chart.aspx?t=VMMXX®ion=usa&culture=en-‐US>.

"Volvo Cars Upgrade to Microchip's MOST150 Devices for Ethernet Packet Transport in All-‐New

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120300596.html>.

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"What Happens If Interest Rates Go Up?" Forbes. Forbes Magazine, n.d. Web. 17 Apr. 2015.

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<http://moneymorning.com/2013/12/13/why-‐pepsico-‐nyse-‐pep-‐stock-‐is-‐the-‐real-‐no-‐

1/>.

"WWDC 2015: The Hidden Strategy That Gives Apple Music The Edge Over Its Competitors."

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He Doesn't Just Own the Products. "Apple Stock Is Making Regular Americans Rich."

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Professor Amy Kratchman

The Fed Said Wednesday That It Continues to Believe Rates Should Remain Low for a

"considerable Time" after Its Bond Buying Program Is Complete -‐-‐ Which Should

Happen following Its next Meeting. "Fed Prepares Market for Eventual Rate Hikes."

CNNMoney. Cable News Network, n.d. Web. 17 Apr. 2015.


US News. U.S.News & World Report, n.d. Web. 17 Apr. 2015.

Walsh, Tamara. "Why You Can't Afford to Ignore PepsiCo Stock in 2015." N.p., n.d. Web. 09

June 2015. <http://www.fool.com/investing/general/2015/02/15/why-‐you-‐cant-‐afford-‐

to-‐ignore-‐pepsico-‐stock-‐in-‐201.aspx>.


Appendix

Cash Flow Sheet

Results'Summary: Savings( 15.00%Inflation 2.340% Your'time'period'for'the'spring'2015'starts'4/1/15

Minimum(ROR((after(tax) 4.961% Tuition(cost(%(change 3.700%Nominal(ROR((before(tax) 7.632% Cost(of(Tuition $46,272Annual(Mangement(Fee 1.000% Current(Salary $300,000Nominal(min(ROR((incl(fees) 8.632% Federal(tax(bracket 35.000%

Annual Retirement Total Return(onDate Client's(Age Period Savings Income Home Vacation Child(One Child(Two Cash(Flow Cash(FlowAprV15 39 0 1,380,036 0 V80,000 1,300,036AprV16 40 1 29,934 6,117 V26,518 9,533 1,374,061AprV17 41 2 30,635 6,117 V26,518 10,233 1,452,459AprV18 42 3 31,352 6,117 V26,518 10,950 1,535,463AprV19 43 4 32,085 6,117 V26,518 11,684 1,623,318AprV20 44 5 32,836 6,117 V26,518 12,435 1,716,282AprV21 45 6 33,605 6,117 V26,518 13,203 1,814,626AprV22 46 7 34,391 6,117 V26,518 13,989 1,918,635AprV23 47 8 35,196 6,117 V26,518 14,794 2,028,609AprV24 48 9 36,019 6,117 V26,518 15,618 2,144,862AprV25 49 10 36,862 6,117 V26,518 V66,544 V50,083 2,201,181AprV26 50 11 37,725 6,117 V26,518 V69,006 V51,683 2,258,695AprV27 51 12 38,607 6,117 V26,518 V71,559 V53,353 2,317,391AprV28 52 13 39,511 6,117 V26,518 V74,207 V55,097 2,377,255AprV29 53 14 40,435 6,117 V26,518 V76,952 V56,918 2,438,268AprV30 54 15 41,382 6,117 V26,518 V79,799 V58,819 2,500,406AprV31 55 16 42,350 6,117 V82,752 V34,285 2,590,161AprV32 56 17 43,341 6,117 V85,814 V36,356 2,682,298AprV33 57 18 44,355 V1,758 42,597 2,857,958AprV34 58 19 45,393 V1,758 43,635 3,043,372AprV35 59 20 46,455 V1,758 44,698 3,239,045AprV36 60 21 47,542 V1,758 45,785 3,445,512AprV37 61 22 48,655 V1,758 46,897 3,663,334AprV38 62 23 49,793 V1,758 48,036 3,893,101AprV39 63 24 50,958 V1,758 49,201 4,135,431AprV40 64 25 52,151 V1,758 50,393 4,390,974AprV41 65 26 V249,065 V249,065 4,359,737AprV42 66 27 V254,894 V254,894 4,321,121AprV43 67 28 V260,858 V260,858 4,274,626AprV44 68 29 V266,962 V266,962 4,219,719AprV45 69 30 V273,209 V273,209 4,155,842AprV46 70 31 V279,602 V279,602 4,082,403AprV47 71 32 V286,145 V286,145 3,998,779AprV48 72 33 V292,841 V292,841 3,904,310AprV49 73 34 V299,693 V299,693 3,798,302AprV50 74 35 V306,706 V306,706 3,680,022AprV51 75 36 V313,883 V313,883 3,548,698AprV52 76 37 V321,228 V321,228 3,403,514AprV53 77 38 V328,744 V328,744 3,243,612AprV54 78 39 V336,437 V336,437 3,068,084AprV55 79 40 V344,310 V344,310 2,875,976AprV56 80 41 V226,521 V226,521 2,792,126AprV57 81 42 V231,822 V231,822 2,698,816AprV58 82 43 V237,247 V237,247 2,595,453AprV59 83 44 V242,798 V242,798 2,481,410AprV60 84 45 V248,480 V248,480 2,356,028AprV61 85 46 V254,294 V254,294 2,218,612AprV62 86 47 V260,244 V260,244 2,068,429AprV63 87 48 V266,334 V266,334 1,904,705AprV64 88 49 V272,566 V272,566 1,726,628AprV65 89 50 V278,944 V278,944 1,533,338AprV66 90 51 V285,472 V285,472 1,323,932AprV67 91 52 V292,152 V292,152 1,097,458AprV68 92 53 V298,988 V298,988 852,912AprV69 93 54 V305,984 V305,984 589,239AprV70 94 55 V313,145 V313,145 305,326AprV71 95 56 V320,472 V320,472 0

Mortgage(Debt College


Asset Allocation Table

YOU$MUST$NAME$EACH$BENCHMARK$YOU$USEDPercentage

Sector Benchmark 201year 51year 201year 51year 201year 51year Invested 51year 31year 51year 31year 51year 31yearTotal1Stock1Market Russell$3000 10.48% 15.69% 15.46% 13.54% 0.50 0.95 0.00 0.00

Large1Cap1Equity S&P$500 10.28% 15.36% 15.17% 13.04% 0.49 0.96 18.00% 0.94 0.95 0.08 0.02Mid1Cap1Equity S&P$400 12.25% 15.52% 17.51% 15.53% 0.54 0.82 9.00% 1.09 1.01 0.07 0.02

Small1Cap1Equity Russell$2000 9.89% 15.21% 19.77% 17.85% 0.36 0.70 9.00% 1.22 1.16 0.05 0.01

Total1Bond1Market Barclays$US$Aggregate 5.94% 4.27% 3.54% 2.79% 0.89 0.53 I0.06 I0.05 0.05 0.10US1Treasury US$TreasuryILong 8.64% 10.29% 10.20% 12.11% 0.57 0.62 10.00% I0.58 I0.56 0.15 0.14 I0.55 I0.03

Investment1Grade1Corporate US$Corporate$Master 5.99% 4.33% 3.63% 2.93% 0.88 0.53 4.00% I0.068 I0.061 0.05 0.1024 I0.06 I0.01High1Yield1Corporate BofA$High$Yield 7.94% 8.94% 8.98% 6.31% 0.57 0.98 0.00% 0.36 0.28 0.05 0.1024 0.25 0.00

Municipal1Bonds Municipal$Master 5.68% 5.19% 5.10% 4.22% 0.57 0.57 6.00% I0.06 I0.03 0.06 0.1000 I0.02 I0.01

Developed1International MSCI$EAFE 7.30% 11.17% 14.59% 11.98% 0.31 0.70 8.00% 0.73 0.727 0.05 0.04Emerging1International MSCI$BRIC 15.69% 6.09% 24.71% 15.12% 0.52 0.22 14.00% 0.82 0.69 I0.01 0.04

Specific1Commodity Gold 7.09% 2.81% 16.69% 18.61% 0.26 0.00 5.00% 0.14 0.21 0.02 0.08Specific1Commodity Crude$Oil 11.96% I2.58% 34.73% 27.46% 0.26 I0.20 10.00% 0.88 1.08 I0.10 0.01

Real1Estate REIT$All$ 12.80% 17.13% 19.31% 15.30% 0.52 0.94 0.00% 0.76 0.42 0.11 0.06

Cash1/1Risk1Free1Asset BellWethers$3M$ 2.79% 0.10% 0.68% 0.03% 7.00% 0.0 0.0100.00%

201year11111Total1Return1= 9.814%Portfolio1Risk1= 10.77%

Portfolio1Sharpe1Ratio1= 0.65

51year1111111111Total1Return1= 8.679%Portfolio1Risk1= 8.83%

Portfolio1Sharpe1Ratio1= 0.97

51Year111111Portfolio1Beta1=1 0.58Portfolio1Alpha1Ratio1= 0.04

31year11111111Portfolio1Beta1= 0.58Portfolio1Alpha1Ratio1= 4.11%

Correlation*MatrixA B C D E F G H I J K L M N

20*year Large*Cap Mid*Cap Small*Cap Total*Bond Treasury Invest*Grade High*Yield Municipal Developed Emerging Specific Specific Real*Estate CashLarge$Cap $1.000$Mid$Cap $.899$ $1.000$Small$Cap $.811$ $.921$ $1.000$Total$Bond$Market $I.008$ $I.037$ $I.085$ $1.000$Treasury $I.222$ $I.243$ $I.270$ $.853$ $1.000$Investment$Grade $I.039$ $I.070$ $I.118$ $.996$ $.868$ $1.000$High$Yield $.617$ $.640$ $.625$ $.185$ $I.126$ $.135$ $1.000$Municipal $I.005$ $.047$ $I.000$ $.627$ $.503$ $.610$ $.264$ $1.000$Developed $.840$ $.794$ $.749$ $I.114$ $I.288$ $I.142$ $.609$ $I.021$ $1.000$Emerging $.646$ $.638$ $.637$ $.007$ $I.177$ $I.018$ $.556$ $.059$ $.702$ $1.000$Commodities$I$Specific $.020$ $.085$ $.104$ $.254$ $.159$ $.265$ $.121$ $.099$ $I.022$ $.220$ $1.000$Commodities$I$Specific $.132$ $.171$ $.141$ $I.045$ $I.183$ $I.055$ $.242$ $I.002$ $.142$ $.249$ $.156$ $1.000$Real$Estate $.565$ $.639$ $.646$ $.165$ $I.030$ $.123$ $.625$ $.192$ $.495$ $.399$ $.136$ $.030$ $1.000$Cash $I.001$ $I.025$ $I.051$ $.141$ $.045$ $.143$ $I.116$ $I.035$ $I.040$ $I.014$ $I.042$ $.018$ $I.043$ $1.000$

Correlation*MatrixA B C D E F G H I J K L M N

5*year Large*Cap Mid*Cap Small*Cap Total*Bond Treasury Invest*Grade High*Yield Municipal Developed Emerging Specific Specific Real*Estate CashLarge$Cap $1.000$Mid$Cap $.943$ $1.000$Small$Cap $.916$ $.971$ $1.000$Total$Bond$Market $I.305$ $I.258$ $I.313$ $1.000$Treasury $I.658$ $I.611$ $I.637$ $.814$ $1.000$Investment$Grade $I.319$ $I.269$ $I.328$ $.999$ $.821$ $1.000$High$Yield $.772$ $.762$ $.713$ $.127$ $I.357$ $.105$ $1.000$Municipal $I.189$ $I.165$ $I.229$ $.777$ $.651$ $.778$ $.090$ $1.000$Developed $.849$ $.794$ $.735$ $I.232$ $I.572$ $I.244$ $.742$ $I.099$ $1.000$Emerging $.734$ $.749$ $.712$ $I.063$ $I.454$ $I.074$ $.755$ $I.022$ $.754$ $1.000$Commodities$I$Specific $.081$ $.188$ $.164$ $.310$ $.133$ $.314$ $.184$ $.207$ $I.015$ $.228$ $1.000$Commodities$I$Specific $.449$ $.402$ $.356$ $I.261$ $I.465$ $I.279$ $.475$ $I.217$ $.361$ $.322$ $.172$ $1.000$Real$Estate $.677$ $.711$ $.669$ $.245$ $I.158$ $.237$ $.768$ $.191$ $.609$ $.586$ $.206$ $.100$ $1.000$Cash $I.120$ $I.074$ $I.077$ $.016$ $.053$ $.023$ $I.060$ $I.018$ $I.203$ $I.115$ $.199$ $.114$ $I.037$ $1.000$

Alpha1to1RussellAverage1Return Standard1Deviation Sharpe1Ratio Beta1to1Russell Alpha1to1Barclays

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Portfolio Distribution Table

Cash%flow%zero

1,000,000

$%%

Settlement%Date:

6/9/15

%%

Your%asset%allocation%decision%goes%here:

Allocated

Allocated

Large-Cap

18.00%

Developed

8.00%

Source:%Yahoo!%Finance%6/9/2015

Mid-Cap

9.00%

Emerging

14.00%

Small-Cap

9.00%

Real-Estate

0.00%

Treasury

10.00%

Specific-Comm

5.00%

Investment-Grade

4.00%

Specific-Comm

10.00%

HY-bonds

0.00%

Municipal-Bonds

6.00%

Cash

7.00%

Total-Portfolio

100%

Equity'Portfolio'Format'0'inclusive'of'equity'funds/'ETF

Closing%

Num

ber%

Amount

%Dividend

Income%

Security/%Fund

Price

of%shares

Invested

Invested

Yield

Generated

PEP

92.84

540

50,134

$---

5.0%

2.90%

1,454

$---------

AAPL

127.8

390

49,842

$---

5.0%

1.60%

797

$------------

TWC

176.37

285

50,265

$---

5.0%

1.70%

855

$------------

DLTR

77.11

390

30,073

$---

3.0%

0.00%

T$------------

-

Sum%Large%Cap%Investments

180,314

$-

18.0%

3,106

$---------

TRN

30.04

1670

50,167

$---

5.0%

1.40%

702

$------------

SAM

255.69

155

39,632

$---

4.0%

0.00%

T$------------

-

Sum%Mid%Cap%Investments

9.0%

702

$------------

IPGP

94.75

530

50,218

$---

5.0%

0.00%

T$------------

-IRBT

32.17

1250

40,213

$---

4.0%

0.00%

T$------------

-

Sum%Small%Cap%Investments

90,430

$---

9.0%

T$------------

-

Foreign'Equity'Portfolio''0'inclusive'of'ETF/'funds

Closing%

Num

ber%

Amount

%Dividend

Income%

Security/%Fund

Price

of%shares

Invested

Invested

Yield

Generated

EWU

18.83

4250

80,028

$---

8.0%

7.11%

5,690

$---------

BKF

38.57

3640

140,395

$-

14.0%

2.70%

3,791

$---------

TOTAL%International%Investments

220,422

$-

22.0%

9,481

$---------

Real'Estate'and'Commodities'0'inclusive'of'mutual'funds

Closing%

Num

ber%

Amount

%Dividend

Income%

Security/%Fund

Price

of%shares

Invested

Invested

Yield

Generated

GLD

112.57

445

50,094

$---

5.0%

0.00%

T$------------

-USO

19.71

5050

99,536

$---

10.0%

0.00%

T$------------

-TOTAL%Alternative%Investments

149,629

$-

15.0%

T$------------

-

Fixed'Income'Portfolio'Format'0'inclusive'of'mutual'funds

Total%Portfolio

Bond%Portfolio

Closing

Par/%Shs

Amount%

%%of%$

%%of%$

Yield%to

Modified

Bond

Security

Quality

Coupon

Maturity

Price

Value

Invested

Invested

Invested

Maturity

Duration

Convexity

0.0%

0.0%

MCHP

BBT

1.625

2/15/25

103.261

51000

40,000

$-------

4.0%

20.0%

1.27%

8.940

88.89

ITM

AAA

4.76%

10.6-yrs

23.300

3350

60,000

$-------

6.0%

30.0%

2.82%

7.100

72Municipal-

IEF

AA2.25

8.46-yrs

106.76

1220

100,000

$-----

10.0%

50.0%

1.91%

7.8

64Treasury-

TOTAL%LT%Fixed%Income%Portfolio

200,000

$-----

20.00%

2.06%

7.82

71.38

Amount

%%of

Cash%Security

Quality

Yield

Maturity

Invested

Portfolio

VMMXX

N/A

0.02

4470,000

$---

7.0%

1564.636009

TOTAL

100.059415%

TEST

Not%fully%invested%or%overinvested


Ratios on Bond Company

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6.88

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21.3

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Net

Mar

gin

(%)

20.4

919

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17.1

920

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8.05

24.3

428

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22.9

0

Ret

urn

on A

sset

s (%

)11

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9.76

8.34

9.98

3.67

11.1

315

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Ret

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quit

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)13

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17.3

917

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25.6

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Ret

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on T

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Cap

ital

(%)

13.8

512

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10.5

013

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4.84

14.9

521

.28

10.8

1

Ret

urn

on Inv

este

d Cap

ital

(%)

13.1

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10.5

313

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4.84

14.9

521

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10.8

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13.4

2

Liqu

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606.

667.

535.

866.

558.

135.

227.

92

Qui

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5.60

5.92

6.74

5.08

5.84

7.26

4.68

7.35

Cred

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naly

sis

EBIT

/Int

eres

t Ex

pens

e (I

nt.

Cov

erag

e)16

2.30

9.03

3.80

9.48

5.15

11.6

015

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7.90

EBIT

DA/I

nter

est

Expe

nse

207.

0012

.55

6.27

13.3

610

.14

14.5

018

.48

10.7

9

Fixe

d-ch

arge

Cov

erag

e Rat

io16

2.30

9.03

3.80

9.48

5.15

11.6

015

.10

7.90

CFO

/Int

eres

t Ex

pens

e23

4.30

12.2

56.

4013

.89

10.9

111

.57

18.4

814

.51

FCF/

Tot

al D

ebt

(x)

3.61

0.71

0.31

0.55

0.40

0.94

1.32

1.19

CFO

/Tot

al D

ebt

(x)

0.90

0.86

0.39

0.66

0.45

1.12

1.68

1.33

LT D

ebt/

Tot

al A

sset

s21

.00

22.3

338

.21

24.6

625

.53

11.5

111

.70

13.5

4

Tot

al D

ebt/

Tot

al A

sset

s3.

9222

.41

38.2

125

.09

25.5

311

.51

11.7

013

.54

Net

Deb

t/Tot

al E

quit

y-5

5.51

-31.

46-6

.46

-15.

17-3

0.78

-55.

46-4

9.45

-56.

98

Tot

al D

ebt/

Tot

al E

quit

y4.

8345

.00

89.3

547

.80

50.8

617

.84

19.1

622

.22

Net

Deb

t/Tot

al C

apit

al-5

2.96

-24.

53-3

.41

-10.

27-2

0.41

-47.

06-4

1.49

-46.

62

Tot

al D

ebt/

Tot

al C

apit

al4.

6028

.89

47.1

932

.34

33.7

115

.14

16.0

818

.18

Add

itio

nal I

nfor

mat

ion

from

Fac

tset

2015

2016

2017

2018

2019

Deb

t D

ue17

5075

060

017

001000

FCF/

Sum

of

5 ye

ars

debt

0.10

Mic

roch

ip T

echn

olog

y (M

CHP)

Rene

sas

Elec

tron

ics

(672

3)A

lter

a (A

LTR)

Ana

log

Dev

ices

(A

DI)

Atm

el (

ATM

L)Cy

pres

s Se

mic

ondu

ctor

(CY

)G

ross

Mar

gin

(%)

49.0

039

.00

62.9

061

.60

47.9

031.1

Ope

rati

ng M

argi

n (%

)20

.00

12.0

026

.60

27.9

07.

10314.9

Net

Mar

gin

(%)

17.2

07.

1023

.70

21.5

03.

30328.9

RO

A (

%)

8.30

7.00

7.70

9.90

3.60

38.9

RO

E (%

)17.7

22.1

13.3

13.6

5.3

314.3

Revenue/Employee,(000)

227.

229

,755

616.

8326.6

268.1

228.2

Rec

eiva

bles

Tur

nove

r (x

)8.30

8.00

4.30

8.10

7.10

4.9

Inve

ntor

y Tur

nove

r (x

)4.00

4.10

4.50

3.50

2.80

2.2

Payables,Turnover,(x)

13.80

5.2

179

8.5

6.7


Duration on Bond

Coupon

1.625%

1.0%

put.in.your.forecast

Maturity

2/15/25

YTM

1.27%

Dollars

%.change

Face.Value

100

B9.231

B8.94%

Price

103.261

0.004

0.00%

Settlement

5/29/15

B9.227

B8.94%

Macauley

9.00

94.431

Modified

8.94

94.034

Convexity

88.89

0.397

0.384%

this.needs.to.be.close.to.0.so.this.is.good!

Cash

PV.of

Date

Time

Period

Flow

Cash.Flow

Duration

Convexity

8/15/15

0.42

0.211

0.8125

0.81

0.171

0.48

2/15/16

1.42

0.711

0.8125

0.81

0.573

2.74

8/15/16

2.42

1.211

0.8125

0.80

0.969

6.55

2/15/17

3.42

1.711

0.8125

0.80

1.361

11.88

8/15/17

4.42

2.211

0.8125

0.79

1.747

18.71

2/15/18

5.42

2.711

0.8125

0.79

2.129

27.00

8/15/18

6.42

3.211

0.8125

0.78

2.505

36.72

2/15/19

7.42

3.711

0.8125

0.78

2.877

47.86

8/15/19

8.42

4.211

0.8125

0.77

3.244

60.37

2/15/20

9.42

4.711

0.8125

0.77

3.607

74.24

8/15/20

10.42

5.211

0.8125

0.76

3.964

89.43

2/15/21

11.42

5.711

0.8125

0.76

4.317

105.92

8/15/21

12.42

6.211

0.8125

0.75

4.666

123.68

2/15/22

13.42

6.711

0.8125

0.75

5.010

142.69

8/15/22

14.42

7.211

0.8125

0.74

5.349

162.92

2/15/23

15.42

7.711

0.8125

0.74

5.684

184.34

8/15/23

16.42

8.211

0.8125

0.73

6.014

206.94

2/15/24

17.42

8.711

0.8125

0.73

6.340

230.68

8/15/24

18.42

9.211

0.8125

0.72

6.662

255.54

2/15/25

19.42

9.711

100.8125

89.18

865.997

34927.23

Total

103.730

933.186

36715.89

Accr.Interest

0.469444

Price

103.261

Mine.is.a.convertible.so.it.may.NOT.match

Macauley

9.00

Modified

8.94

Implies5needs5to5be5filled5in

Microchip.Technology.Incorporated.1.625%.15BFebB2025...

Corporate.Convertible/Exchangeable...Rule.144A...Current.

Price:.103.467

Excel5Calculation

Estimation.error

If.yield.increases.by

Modified.Dur.predicts

Convexity.adjustment

Predicted.price.change

Actual.new.price

Predicted.new.price

()

B

tt

Mac

V

ti

CF

Dur

∑ =+

=

n

1t

1

() i

Dur

Dur

Mac

Mod

+=

1

()

()(

)

B

tt

V

tt

iCF

iC

! "#$ %&

++

+=

∑ =n 1t

22

111


Fund/ETF Supporting Data

Total&Return 6.19 04.53 10.28 0.19Benchmark&Return 6.78 02.55 9.05 0.48Category&Return 3.4 02.35 7.7 0.61Expense&Ratio 0.54%Dividend&Yield 2.18%Tracking&Error&(ETF) 0.29%Bid/Ask&Spread&(ETF) 0.13%

ITM$VS.$Barclays$Municipal$TR$USD

3$year 5$year

Total&Return 2.94% 4.73Standard&Deviation 4.59% 4.92Sharpe&Ratio 0.64 0.95Alpha 01.27 01.10

Total&Return 3.66% 06.09% 9.06% 1.95%Benchmark&Return 4.21 02.02 5.97 1.24Category&Return 2.9 011.92 24.32 0.8Expense&Ratio 0.15%Dividend&Yield 1.93%Tracking&Error&(ETF) 0.11%Bid/Ask&Spread&(ETF) 0.03%

IEF$VS.$Barclays$US$Agg$Bond$TR$USD

3$year 5$year

Total&Return 2.44 5.8Standard&Deviation 5.39 6.00Sharpe&Ratio 0.46 0.96Alpha 02.10 02.22

FUND$NAME:$ITM

FUND$NAME:$IEF$(iShares)

2012 2013 2014 YTD$2015

2012 2013 2014 YTD$2015

ETF&comparison&should&be&to&benchmark&only&while&funds&are&to&both&the&category&and&the&benchmarkThis&needs&to&be&comleted&for&all&ETF's&and&funds


Valuation Ratios for Individual Stocks

Prev%Close: 93.05

Open: 93.3

Bid: 92.84%x%300

Ask: 92.96%x%200

1y%Target%Est: 106.15

Beta: 0.82

Earnings%Date: Jul%21%G%Jul%27%(Est.)

Day's%Range: 92.74%G%93.41

52wk%Range: 86.71%G%100.76

Volume: 4,466,617

Avg%Vol%(3m): 4,509,890

Market%Cap: 137.04B

P/E%(ttm): 21.62

EPS%(ttm): 4.3

Div%&%Yield: 2.81%(2.90%)

Source:%Yahoo!%Finance%June%8th,%2015

Pepsico((PEP)

Prev%Close: 128.65

Open: 128.94

Bid: 127.75%x%300

Ask: 127.78%x%500


Beta: 1.07

Earnings%Date: Jul%20%H%Jul%24%(Est.)

Day's%Range: 126.83%H%129.21

52wk%Range: 89.65%H%134.54

Volume: 52,674,786

Avg%Vol%(3m): 47,896,400

Market%Cap: 736.26B

P/E%(ttm): 15.88

EPS%(ttm): 8.05

Div%&%Yield: 2.08%(1.60%)

Apple%(APPL)


Prev%Close: 178.06

Open: 177.73

Bid: 176.17%x%3400

Ask: 176.20%x%1000


Beta: 0.95

Earnings%Date: Jul%29%H%Aug%3%(Est.)

Day's%Range: 175.85%H%177.99

52wk%Range: 128.78%H%184.89

Volume: 4,871,889

Avg%Vol%(3m): 4,138,100

Market%Cap: 49.87B

P/E%(ttm): 24.99

EPS%(ttm): 7.06

Div%&%Yield: 3.00%(1.70%)

Time%Warner%Cable%(TWC)

Prev%Close: 77.64

Open: 77.5

Bid: 70.77%x%100

Ask: 82.16%x%100


Beta: 1.08

Earnings%Date: Aug%19%F%Aug%24%(Est.)

Day's%Range: 77.06%F%77.91

52wk%Range: 52.92%F%84.22

Volume: 1,215,593

Avg%Vol%(3m): 2,299,860

Market%Cap: 15.90B

P/E%(ttm): 30

EPS%(ttm): 2.57

Div%&%Yield: N/A%(N/A)

DollarTree((DLTR)


Prev%Close: 30.69Open: 30.68Bid: 30.02%x%200Ask: 30.73%x%3001y%Target%Est: 37.7Beta: 1.6Earnings%Date: Jul%27%F%Jul%31%(Est.)Day's%Range: 29.93%F%30.6852wk%Range: 24.41%F%50.77Volume: 1,844,411Avg%Vol%(3m): 2,817,950Market%Cap: 4.65BP/E%(ttm): 7.69EPS%(ttm): 3.91Div%&%Yield: 0.44%(1.40%)

Trinity'Industries,'Inc.'(TRN)

Prev%Close: 260.38Open: 259.55Bid: 255.61%x%300Ask: 255.88%x%1001y%Target%Est: 295.75Beta: D0.1Earnings%Date: Jul%28%D%Aug%3%(Est.)Day's%Range: 253.75%D%260.9452wk%Range: 210.03%D%325.00Volume: 190,851Avg%Vol%(3m): 127,519Market%Cap: 3.41BP/E%(ttm): 36.17EPS%(ttm): 7.07Div%&%Yield: N/A%(N/A)

Boston&Beer&(SAM)


Prev%Close: 98.55Open: 98.72Bid: 90.00%x%100Ask: 100.00%x%1001y%Target%Est: 108.83Beta: 1.91Earnings%Date: Jul%27%F%Jul%31%(Est.)Day's%Range: 94.65%F%98.7252wk%Range: 60.75%F%102.49Volume: 303,381Avg%Vol%(3m): 366,950Market%Cap: 4.99BP/E%(ttm): 23.11EPS%(ttm): 4.1Div%&%Yield: N/A%(N/A

IPG$Photonics$(IPGP)

Prev%Close: 32.38

Open: 32.3

Bid: 30.01%x%100

Ask: 32.99%x%300

1y%Target%Est: 38

Beta: 1.89

Earnings%Date: Jul%20%D%Jul%24%(Est.)

Day's%Range: 32.03%D%32.40

52wk%Range: 28.05%D%42.00

Volume: 144,792

Avg%Vol%(3m): 407,369

Market%Cap: 956.22M

P/E%(ttm): 26.18

EPS%(ttm): 1.23

Div%&%Yield: N/A%(N/A)

Source:%Yahoo!%Finance%June%8th,%2015

iRobot&Corporation&(IRBT)


Prev%Close: 18.86Open: 18.83Bid: 18.79%x%800Ask: 18.86%x%100NAV¹: 18.76Net%Assets²: 3.05BYTD%Return%(Mkt)²: 7.21%Day's%Range: 18.73%P%18.8552wk%Range: 17.11%P%22.11Volume: 2,043,216Avg%Vol%(3m): 3,132,230P/E%(ttm)²: 18Yield%(ttm)²: 7.11

¹As%of%Jun%5,%2015²As%of%May%31,%2015

iShares(MCSI(United(Kingdom((EWU)(

Prev%Close: 38.38

Open: 38.51

Bid: 38.62%x%100

Ask: 38.63%x%100

NAV¹: 38.6

Net%Assets²: 283.37M

YTD%Return%(Mkt)²: 10.99%

Day's%Range: 38.49%Q%38.61

52wk%Range: 32.79%Q%42.26

Volume: 26,822

Avg%Vol%(3m): 57,514

P/E%(ttm)²: 13

Yield%(ttm)²: 2.7

¹As%of%Jun%5,%2015

²As%of%May%31,%2015

iShares(MCSI(BRIC((BKF)(


Prev%Close: 112.24

Open: 112.39

Bid: 112.30%x%300

Ask: 112.71%x%300

NAV¹: 111.68

Net%Assets²: 27.41B

YTD%Return%(Mkt)²: 0.46%

Day's%Range: 112.13%P%112.66

52wk%Range: 109.67%P%129.21

Volume: 3,122,078

Avg%Vol%(3m): 5,249,880

P/E%(ttm)²: NA

Yield%(ttm)²: 0

¹As%of%Jun%5,%2015

²As%of%May%31,%2015

SPDR%Gold%(GLD)

Prev%Close: 19.9

Open: 19.75

Bid: 19.68%x%2000

Ask: 19.71%x%1900

NAV¹: 19.64

Net%Assets²: 2.51B

YTD%Return%(Mkt)²: K0.25%

Day's%Range: 19.55%K%19.89

52wk%Range: 15.61%K%39.44

Volume: 11,457,092

Avg%Vol%(3m): 25,618,100

P/E%(ttm)²: NA

Yield%(ttm)²: 0

¹As%of%Jun%8,%2015

²As%of%May%31,%2015

United'States'Oil'(USO)

7"Day&Yield: 0.02%Time: 8"JunAssets: 104.16BAvg&Maturity&(days): 44

Vanguard(Prime(Money(Market(Fund((VMMXX)

nibbs_iris_fin seminar term project_final

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