Case 11

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The Misguided Bond Case 11 Prepared by for Professor C.E. Reese in partial fulfillment of the requirements for ACC 541- FORENSIC ACCOUNTING School of Business/ Graduate Studies St. Thomas University Miami Gardens, Fla. Term A1/Spring, 2015 March 25, 2015 Table of Contents Issues………………………………………………………………. 1 Facts……………………………………………………………….. 1 Analysis/ Authority………………………………………………... 6 Conclusions/ Recommendation……………………………………. 8 Issues 1. What is Martin’s actually return for 2000, 2001, and 2002? 2. What would have been Martin’s return for years 2000, 2001, and 2002 if his portfolio had remained with its initial holdings? 3. How do STRIDEs contrast with conventional bonds? 4. How appropriate were these STRIDEs for a 78…show more content…
These bonds are short-term, only 12 months until maturity and pay 12% annually. I haven’t seen all the details on them, but this really might be a good way to increase you’re your total income and at the same time avoid the interest rate risk of intermediate-term and long-term bonds.” “That certainly sounds good to me. What are the companies that back these bonds? You know that I don’t like risky companies. This is all of the money that I have.” “Right off hand I remember that National Telecommunicating Data and Glorious Home Products are two of them. Both of these companies have done very well over the past five years and are certainly good companies for the long pull. Since these bonds are so short-term, I would be very comfortable for you to own them. Why don’t you come down tomorrow and let me show you some information.” Romano looked at the summary diagram from their article that was written on the chalkboard to her left. She thought, “It’s obvious that the question of interest is the financial impact incurred relative to the benchmark of a well-managed portfolio. It was pretty clear that Martin’s portfolio had experienced significant losses. As to the data, the year-end statements are all that we need. The comparison will be easy”. However, Romano will need to evaluate all the related information to conclude whether or not the account had been

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