7-2 Final Project Submission, Part III.docx - Running head...

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Running head: FINAL PROJECT PART III1FIN 320 Final Project Part III Southern New Hampshire University
FINAL PROJECT PART III 2Making a decision of whether or not to sell stocks or bonds is always a tough decision to make. However, the investments should be efficiently assessed to determine whether it would be more beneficial to the holder to sell or keep their stocks/bonds. As of February 21, 2019, 500 Apple bonds is valued at $85,975.00(171.95 x 500). The stock price for Apple shares on February 21, 2014 was 75.04 (MergentOnline, 2019). As it relates to the Apple bonds, the number of years applicable is 5 (10-5). Apples, most recent ten-year bonds were traded at $102.775 with a fixed rate of 2.862%% (Marketwatch, 2018). Taking into consideration that the coupon rate is 3.25%, the coupon rate multiplied by the total amount of Apple bonds, 100 would give us a yearly coupon discount of 3.25 (3.25% * 100). The sale of the Apples bonds would be atotal of $95,010.00(=PV (5,0.0286,5,1000) *100).There are numerous advantages and disadvantages to selling a combination of stocks and bonds. Advantages include the fact that stock prices rise and fall periodically providing uncertainties while bonds prices can be better determined as they are mostly affected by inflation. In essence, selling a combination of stocks and bonds allow investors to diversify their selling options by ensuring that their uncertainties are limited. In addition, while stocks have no guaranteed return, bonds have a higher chance of fostering returns. Thus, selling a combination of these investments will ensure that investors receive gains on both stocks and bonds instead of losing out of on what the latter has to offer. If the investor sells all the bonds attained, they will lose the coupon that is available as a result of buying the bond. Hence, it would be better to keep a portion of the bonds in order to benefit from this. Disadvantages include the fact that stocks typically have higher returns compared to stock and the investor may lose out on these returns byoffering the stock for sale. In addition, bonds tend to fluctuate less than stocks and offering them
FINAL PROJECT PART III 3for sale not only forces the investor to lose their coupon but also the stability and liquidity that bonds offer. Apple is a technology company that specializes in the sale of many electronic devices andinnovative ideas. According to Apple’s 2018 10-K which is attached below, the company’s earnings per share has increased significantly over a five (5) year period; ranging from 6.49 in 2014 to 12.01 in 2018 (Apple Inc, 2018). This indicates that Apple’s common stock shareholders were able to receive an increase in their dividends in the long run. This is also a great sign that any investment in the company will be valuable. According to Gurufocus (2018), Apple’s

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