Final UPS Team Paper!

Actuarial assumptions that result in a higher value

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actuarial assumptions that result in a higher value of plan liabilities and, consequently, requires the employer to contribute more money to the plan (found in At-Risk Liabilities row). Acting as fiduciaries of UPS we made it our duty to try to solve the plan’s current status in order to take the burden off UPS. To do so, we needed to make the smartest investments that could boost funds going towards the pension plan. Our first decision to make was how we wanted to allocate the $100,000,000 between stocks and bonds. Jones’ article, "Bond-Market Outlook 2012," stated to expect the Fed to keep interest rates low for the year. This factor did not align with the team’s goal for the pension plan; we wanted to receive high returns in order to minimize the plan’s discrepancy in funding. With the near- zero interest rates present, we decided to heavily allocate into stocks to assure we’d receive higher returns. Overall, our portfolio performed and we received a higher percentage return compared to the S&P 500 and LAG. While we had a great deal of stocks and we were expecting a higher yield that did not necessarily dictate how we picked our stocks. We wanted to have risk in order to get high yield but we wanted to justify risk. We looked for stocks with high betas if they had potential for really high returns, while also diversifying our portfolio with less risky stocks in order to balance our investments. A sector that always seems to remain in high demand is the technology industry. Being highly competitive, companies are striving to remain the most innovative. In order to thrive as a company in general, it is necessary to keep up with new products and devices that keep things systematic and as efficient as possible. This is what induced us to invest in Apple, Texas Instruments, and Intel. The reason we had chosen to invest in Apple was due to multiple reasons. Apple is a multinational corporation that sells consumer electronics, computer software, and personal computers. By looking at the company’s 50-day moving average, I had seen the stock increase while the S&P had done so as well. Apple actually moves the index. With zero debt, it is expected that the company would invest in something such as technology. Apple has so much free cash that it is not limited moral hazard, therefore making it a growth stock. One particular issue that had high potential in affecting the company was an alleged e-book collusion regarding the fixation of electronic book prices with major
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publishers. This ultimately would make e-books significantly more expensive than it originally had been. However, Apple is denying this accusation. The company claimed that its entry into the e-book era has broken a monopolistic grip on the publishing industry by online retailer, Amazon (“Apple Denies US Accusation”). In early March, Apple openly announced its selling of dividends for the first time
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actuarial assumptions that result in a higher value of plan...

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