Final Project Part III.docx - FIN 320 Principle of Finance...

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FIN 320 Principle of Finance Final Project Part III1FIN 320 7-2 Final Project Submission, Part IIIJeremy TurnerSouthern New Hampshire UniversityFIN 320: Principles of Finance
FIN 320 Principle of Finance Final Project Part III2School Versus WorkThe decision on whether to sell your stocks or bonds is a difficult one and should beanalyzes thoroughly before making that final call. The best tool to use for a decision such asthese is to effectively analyze all necessary scenarios in an effort to determine if your stocks orbonds should be sold or if you should hold on to them for a longer period in an attempt to receivea higher overall return. Apple closed on August 13, 2020 at a price of $460.04 a share. Thepurchase of 500 Apple shares took place five years ago. The price per share on August 10, 2015was $115.96 making the shares worth a total of $48,000.00. The market value for the shares onAugust 13, 2020 was $230,020.00 according to data pulled from Yahoo finance. The stock valuehas increased a total of $182,020.00 during this 5-year period. The current trade price of Applebonds is $112.62 with a yield of 3.0%. If we had a 3.25% coupon rate when the bond waspurchased five years ago, with the coupon rate being multiplied by the total amount of bonds inApple, then we would end up with a yearly coupon discount of 3.25%. If I were to sell my Applebonds prior to the maturity date than that would net me $94,771.87. With these numbers beingdisplayed it is easy to determine that the sell of the Apple stocks would result in a larger payoutthan the Apple bonds. However, if you hold onto the Apple bonds for a longer period of time, theamount the bonds offer on return could potentially out way the return on the Apple stock. In this situation the sale of a combination of stocks and bonds may be the best route totake. If I sold all the Apple stocks, I would be able to pay the tuition off and have over$100,000.00 left over in my bank account. If I sold all the bonds than I would be taking a loss onthe bond before it reached it’s maturity date. If I were to wait until the bonds maturity date than Istill wouldn’t even be able to pay off my $100,000.00 tuition debt. If I were to sale a
FIN 320 Principle of Finance Final Project Part III3combination of the stocks and bonds than it would allow me to still pay off my tuition debt allwhile still having stocks and bonds for Apple in my investment portfolio. In a diversifiedportfolio, assets don’t necessarily coincide with each other. When the price of the stock rises, theprice of the bond falls and vice versa. This means that the risks are lowered because if theeconomy isn’t performing properly than only one of your assets will decrease. The other assetwill rise based upon the before statement. This allows for an offset in one of the assets when theother is losing. When it comes to stocks and bonds, their prices can fluctuate dependent upon thewants and needs of the products the company offers. “When stocks are on the rise, investorsgenerally move out of bonds and flock to the booming stock market (Lioudis, 2019). Stocks do

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