UPX Material - University of Phoenix



University of Phoenix Material

Week 3 Problems

1. Complete Worksheet 37 in Focus on Personal Finance, “Your Financial Plan – Evaluating Corporate Bonds.”

2. Explain the principle of asset allocation. Using the Internet or library research, prepare a 2-minute presentation describing why the principle of asset allocation is important when establishing an investment program.

3. Assume you are 59 years old, want to retire in 6 years, and currently have an investment portfolio valued at $550,000 invested in technology stocks. After talking with friends and relatives, you have decided that you have “too many eggs in one basket.” Based on this information, use the asset allocation method described in this chapter and use the following table to diversify your investment portfolio. Then answer the following two questions:

o What are the advantages of asset allocation?

o How could the time your investments have to work for you and your age affect your asset allocation?

|Investment Category |% Allocated |Comments: What is this asset class expected|

|(Asset Class) | |to contribute to the portfolio? (i.e.: |

| | |growth, income, safety, diversification, |

| | |etc.) |

|Large-cap stocks | | |

|Mid-cap stocks | | |

|Small-cap stocks | | |

|Foreign stocks | | |

|Government bonds | | |

|Corporate bonds | | |

|Cash | | |

|Other investments (specific types e.g. real | | |

|estate) | | |

|Total Allocation (must = 100%) | | |

(If needed:)

References

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