A friend has confided in you that they have recently inherited a moderately sized investment portfolio from a relative. They don’t know what to do with the assets. The friend comes to you for advice....

A friend has confided in you that they have recently inherited a moderately sized investment portfolio from a relative. They don’t know what to do with the assets. The friend comes to you for advice. Your immediate advice, of course, is for your friend to seek professional advice from a tax expert as well as a financial adviser. Your friend persists, however, and asks how the investment returns of the portfolio compare to other investments. You agree to review the portfolio and calculate the yields of each investment as well as determine the weighted average yield for the entire portfolio.

Refer to the attached investment schedule. For your quantitative analysis compute the current market value of each security position of the portfolio, calculate individual yields based on current market pricing, and determine the weighted average factor and the weighted average yields.

• Explain the basis upon which you determined the weighted average yield.


• Explain the difference between a yield that is based on cost, as opposed to one that is based on current market value.
  
  
  
  • What are the different uses of both?
  
  
  
  


• What non-quantitative observations can you make about the portfolio?

Extracted text: A D E G H Portfolio Weighted Current Market Price Current Estimated Estimated Weighted Type of Stock Position Symbol (# of Market Dividend/ Current Yield Company Name Average Average Investment Value Interest Factor Yield 1 shares) 2 Common stock Altria 3 Common stock AT&T 4 Common stock Chevron 5 Common stock Coca Cola 6 Common stock Duke Energy $247.00 U $325.00 мо 119 50.04 173 32.09 U CVX 26 125.82 $111.00 ко 59 54.33 U $77.00 U $206.00 $86.00 DUK 65 87.68 7 Common stock Johnson & Johnson JNJ 31 128.84 U U 8 Common stock McDonalds 9 Common stock Pepsi Cola 10 Common stock Philip Morris Intl 11 Common stock Proctor & Gamble $176.00 $44.00 MCD 52 214.31 PEP 17 130.74 PM 70 86.75 $280.00 U U PG 52 113.85 U $133.00 12 13 Total Portfolio Market Value 14 Weighte Averatge Yield: 15