Thursday
August 28, 2014

Homework Help: Investing

Posted by candy on Tuesday, August 1, 2006 at 12:14am.

Cliff Swatner is single, 33 and owns a condominium in New York City worth $250,000. Cliff is an attorney and doing well financially. His income last year exceeded $90,000, and has sufficient liquid assets to supplement his condominium and other tangible assets. Several years ago, Cliff began investing in stocks and bonds. He made his selections on the basis of articles he read describing good investment opportunities. Some have worked well for Cliff, but others has not. Cliff has never taken the time to evaluate his portfolio performance, but he feels it isn't very good. Cliff currently has about $90,000 invested. He has been dating a women lately and hopes to marry her in three years, at which time he will need $20,000 for marriage expenses and a honeymoon. Cliff's only objective is to accumulate funds for retirement, but he does not have a specific dollar target for this goal. Cliff feels that he has a moderate risk-tolerance level.

Explain some disadvantages of Cliff's current investment approach.

Construct a portfolio for Cliff, limiting your selections to mutual funds (assume that he sells his current stock and bond holdings). Make sure your plan indicates specific dollar amounts for each portfolio component. Make sure your plan also explains your selections for each portfolio component.

Explain how Cliff should periodically rebalance his portfolio, indicating how frequently rebalancing should be done.

Please help me! : (


Compare a regular cash dividend with a periodic share repurchase. Which has greater appeal to you? Explain.

Explain a stock dividend and further explain if you would perfer it to a cash dividend.

What are stock splits and how desirable are they?


Compare a regular cash dividend with a periodic share repurchase. Which has greater appeal to you


Compare a regular cash dividend with a periodic share repurchase. Which has greater appeal to you? Explain.
Explain a stock dividend and further explain if you would prefer it to a cash dividend.
What are stock splits and how desirable are they?
In your own words, post a response to the Discussion Board and comment on other postings. You will be graded on the quality of your postings.




The benefit of PSR's are of greater appeal to me because; a) it brings financial gain without any tax exposure and b) it should enhance the long term value of the company shares.
A stock dividend is payment of the company dividend in the form of additional stock shares. It is prefereable again because it avoids the tax exposure of a cash dividend and again because it benefits the company long term in that the money stays within the company (for re-investment in r&d for example). Stock Splits a rea process whereby current shareholders receive additional shares, based upn their current holidign. For example a 2 for 1 split would give someone with a holding of 100 shares an additional 100 shares, totaling 200. Stock Splits are similar to Stock Dividends; they increas the number of that company's shares in existence without lowering the company's market capitalisation. They do, however, inevitably lead to a lowering of the share price.
Regards,
The One

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