FIN 320 Final Project Part III.docx - FIN-320 Final Project...

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FIN-320 Final Project Part IIIKewanna DoyleSouthern New Hampshire UniversityApril 17, 2020
School Versus WorkThe current market value of Apple stock is $282.20 per share totaling $141,100 ($282.20x 500= $141,100). When the stock was purchased in 2015 the market value was $66,500. Thecoupon rate is 3.25% for the Apple bonds with the par value of $1,000 is $325(3.25x100) peryear, so selling the bonds in the five-year period the payout would be the following:1styear2ndyear3rdyear4thyear5thyearTotal bondpayout$325$325$325$325$325+100,000100,325$101,625(325x4)+100,325Selling the bonds early would reduce the total amount paid out at the 10-year maturity date. Theadvantages of selling a combination of both stocks and bonds would be the risks offset of thediversification in the portfolio. While stocks have the potential gain of higher returns and risksand bonds guarantee of a more reliable return. The diversity in the portfolio can ensure safetywhile leaving the opportunity for above-average returns in the stock investments. Thedisadvantages of selling the combination is that the risk versus parity judgement that helps theinvestor factor the distribution ratio of the portfolio may not be helpful when deciding on howmuch to sell when the bonds are not at full maturity. I would choose to sell only the stocks. Thisdecision would be based on the current market value of Apple stock and wait until the fullmaturity of the bonds. The current market value would produce enough money to pay for tuition.

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