Analysis Of Mr. Bailey 's Investment Portfolio

1567 WordsApr 30, 20177 Pages
Introduction The purpose of this final finance paper is to provide an analysis of Mr. Bailey’s investment portfolio. I will be discussing the investment risks and returns, diversification, and recommendations for his current portfolio. This will be a detailed analysis based on his stocks, investment property, and potential for expanding and/or modifying his portfolio. In addition, there will be sources provided to support the analysis followed by a spirited and succinct supposition which recapitulates his existing portfolio and any commendations to be made. Investment Risks and Returns From an initial evaluation, Mr. Bailey’s investment portfolio appears to be in good standing. He has five stock assets and in investment property which…show more content…
Regarding his previous case from module 6 with the stock portfolio returns, here is the chart: And the chart as shown below (Heksagonas., 2013) using a simple portfolio calculator: The differences in risks and total returns is evident from the charts above. Microsoft and Johnson & Johnson, show the most consistency with a return percentage, while Nike is high risk, high return, and Chipotle and Exxon Mobil are low risk and low return types of stocks. Next, I will evaluate Mr. Bailey’s diversification analysis and potential for improvement. Diversification Mr. Bailey’s investments appear to be exclusively domestic assets. With a wide variety of stocks internationally available, he should consider expanding his portfolio based on the diversification potential accessible to him. With the amount of monetary assets within the corporate bond market, which is estimated to be around $7.5 trillion, there is plenty of return potential available for individual U.S. investors. The study from the article, “Portfolio Diversification and International Corporate Bonds” by Edith X. Liu, implies the minimal amount of invested assets U.S. investors have in the corporate bond market. With the statistical evidence of over 80% risk reduction in this market, which were observed exclusively during the crisis period, the return potential is obtainable for Mr. Bailey (Liu, E. X., 2016, pp. 959-983). In addition to Liu’s

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