Qms Case 1

Topics: Investment, Bond, Finance Pages: 2 (669 words) Published: March 2, 2011
Case Report 1 “

1.Considering that Pansky is a retired grade school teacher and wants to invest conservatively I would recommend US Treasury securities. US. Treasury securities offer the lowest risk to investors because they are backed in full by the US government. Of the other choices a money market mutual fund would be the next lowest in risk because it is invested in a portfolio of short term high grade debt securities. A retired individual who requires income should invest in bond funds, not growth. Since Sue Pansky is a risk avoider she should invest in the corporate bonds.. The reason is that her investment of $30,000 is secure to the extent of $20,000 as this amount has been guaranteed by Julia. The bond would return 13% per year and at least $ 20,000 back at the end of the year

2. Since Julia anticipates that corporate bonds would return 13% than Ray Cahn, a commodities broker would probably be helping her with the sell of Julias “Baby food Since, Ray Cahn believes that there is only 11 percent of success in case of preferred stocks his expected returns is 11% X 4 = 44% plus 50% = 94%. In case of common stocks his expected returns is only 88%. So, Ray Cahn should go in for corporate bonds.

3. Lila is a risk avoider and very conservative; I would recommend her to purchase U.S. Treasury Bonds. Not to purchase long term bonds because interest rates will rise and it could be affect bond prices. She believes that Julia has a good chance of being successful; she should go in for common stock. On the other hand she is very conservative and a risk avoider, so she should go in for corporate bonds. On balance the recommendation for Lila is that she should go in for corporate bonds. 4. George Yates believes that “there is an equally likely chance for success”. It sounds like he is a risk taker and should invest in stocks. George Yates is considering that, “starting right corporation” is a small company that demonstrates significant long term growth...
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