Dolla Case

Stock split is an action by a corporate to divide it existing shares into multiple shares. This increases the number of the company’s outstanding shares. However, when compared to share amount the total dollar value of the dollar remains the same.

According to the definition stock split is a method commonly used to lower the market price of a firm's stock by increasing the number of shares belonging to each shareholder. Companies are able to split their stocks in any number of ways. The most common stock splits are, 2-for-1, 3-for-2 and 3-for-1. For example, if you own 100 shares of a company that trades at $100 a share and it declares a 2-for-1 stock split, you will own a total of 200 shares at $50 a share after the split. It is also possible to have a

and reaped all the rewards. This continued until “helpers” came and convinced a few members that they could earn them a better rate of return by selling and buying various stocks for a small fee. The fees of the “helpers” and taxes from capital gains result in the diminishing of the entire family’s wealth. The parable is trying to get a person to understand that by paying others to make your investment decisions, they are actually taking away from you. In Buffett’s words “For investors as a whole, returns decrease as motion increases”(5). This is the general theme of the book; that as your investment strategy gets more complicated, returns will decrease. Jon Bogle takes this idea and runs with it in the rest of the book, discussing 3 simple ideas: invest primarily in stocks, invest for the long term, and invest in index funds.

For example, let’s assume you invest 100% of your money into one stock. Your return and risk is based solely on how this stock performs, and if the company happens to tank, then you have just taken a huge hit to your investment and retirement money. In a different scenario, let’s assume that you invest only 10% of your portfolio in the same stock, while investing the remainder in 30% bonds and 60% other stocks. Assuming the same company tanks, you only risk a loss of 10% of your overall investment, with a remaining 90% still working for you. Theoretically, while the one fund is losing money, you should still expect the remaining 90% of your money to continue to grow. In this scenario, diversification has successfully decreased your risk of loss, while maintaining a level of growth to try and make up for the loss.

Based upon Susan’s current financial situation, she appears to be in a good place at this point in time. This can be illustrated by these simple facts: that she holds a regular job that pays $135,000 annually, recently inherited a portfolio that is worth almost $350,000, and presently has $10,000 in cash (Smart, 2014, pp. 202). Based upon the fact of her current employment situation, Susan is in a place to where she does not have to rely on her present portfolio in order to make up her income needs at this point in time in her life. Therefore, when it comes to her main portfolio objectives, she should place her concerns on capital preservation and capital growth (Smart, 2014, pp. 17). She should look at these objectives for the future when retirement needs to be considered. While this may not be her main concern at this point in time due to her age, it is something that she should keep in mind for the future when retirement is imminent.

Asset allocation is an investment portfolio technique that balances risk and creates diversification. To do this, someone can divide their assets among major categories such as stock, real estate, cash, and bonds. This diversification allows your portfolio to balance out because one asset may be decreasing, but the other will be increasing at the same time to create the balance needed for consist profits. Thus, the principle of asset allocation would be that the older a person gets, the less that person should take on in their portfolio. When a person retires, they may have to depend on their savings as their only source of income. Asset preservation is critical at that time in a persons life.

The trade-off here is that the dividend income gained by fund shareholders is often at the expense of slower growth and lower price appreciation for fund holdings.

2. It is important for financial managers to understand the concept of the time value of money. There are a few reasons for this. The first is that financial planners deal with future cash flows. These include things like interest-bearing investments, but also the future value of accounts that their customers will have. It is imperative that financial planners have a good sense of how their strategies will affect their customers, and

In today’s day and age, there is a tremendous number of financial vehicles that each and every investor can place their money in. Investors place their money into each of these financial tools in order to make any sort of profit. Obviously, investors do whatever is in their power to make the largest profit possible. Bonds, stocks, and mutual funds are three of these many options for financial growth. Unfortunately, people that may have heard of these do not take advantage of them at all. Bonds, stocks, and mutual funds are relatively simple financial vehicles and people today do not jump on the opportunity to invest. A large majority of people do not explore their options when it comes to allowing their money grow exponentially.

In our investment thesis, we pursue both strategic asset allocation (SAA) and tactical asset allocation (TAA). SAA is a long-term approach to determine the portfolio, while TAA is a short-term approach where the managers will seek to take advantage of market inefficiencies.

Recent decades have witnessed a sharp increase in the institutionally managed savings, both in absolute terms and relative to household financial wealth (Davis and Steil, 2001; BIS, 2003). As a result, institutional ownership is an increasingly dominant feature of developed financial markets. Delegated portfolio management is a complex phenomenon which encompasses different segments. The mutual fund industry is predominantly characterized by middle-aged households investing individually in sometimes relatively standardized products. By contrast, pension funds are predominantly managed by corporate treasures, who often delegate the asset management to a third party, thus creating an additional layer of agency. As emphasized by Lakonishok et al. (1992b), corporate treasures often make recourse to investment counsellors for reasons which go beyond the optimization of asset allocation. Non-economic factors such as handholding and generally direct interaction are likely to play an important role in the pension fund industry, while funds allocation is more based on past performance in the mutual fund industry. Another important stylized fact of the delegated portfolio management industry is the poor performance of active management compared with a passive benchmark (Malkiel, 1995; Gruber, 1996).

The concept of portfolio management is a lucrative sword as not only it offers not only returns but the investor also have to face risk associated with it. If the Investor is willing to earn higher return he has to associate higher return with higher risk. For an investor to diversify away the risk he can follow diversification rule. Under diversification, investor can include the assets which are not correlated to each other and thus by including these asset classes he can diversify away the risk. However, in terms of the risk there are two kinds of risk i.e Unsystematic Risk and Systematic Risk and an investor can diversify only unsystematic risk by following diversification rule including the asset classes

As explained above, expounding your present position and your future needs for capital, including your risk tolerance, will aid you, as to how your investments should be assigned among varied asset classes.

Diversification, as a risk management means, mainly concerns the alteration and experimentation of various kinds of investments that are included in a specified portfolio. The reason why it is the usual practice is because a certain portfolio is mostly inclusive of different investments that can bring about higher profits as a relatively lower risk of stand-alone investments within the similar or

As the financial manager, my main concern is to align an investment strategy with my client’s goals. Knowing and understanding my client allows me to choose investments that will be beneficial to my client. My latest client is in his early thirties, has a small retirement fund already, but wants to build a larger investment portfolio as he begins to plan ahead for the future. My client’s goal is to begin building his future retirement account so he will be in a stable financial situation when he reaches retirement age. Being in his early thirties, this was something he only passively though about previously and therefore only currently has a modest retirement account. However, my client recently took some accounting and finance