Minimizing Financial Risk- Dividend Discount Model

To illustrate your knowledge of portfolio construction, design two portfolios based on the following scenario: Part 1: John and Roberta Johnson are approaching retirement. They have accumulated $800,000 in funds. They would like to divide their funds into two equal portfolios, one conservative portfolio that will generate income, and one aggressive portfolio that is focused on growth where income generation is not a consideration. Design two separate 400,000 portfolios based on the goals of each portfolio.

Each portfolio should contain 3 common stocks, one investment grade bond you researched at this site, and one ADR you researched at this site. Be sure to choose stocks for each portfolio with appropriate dividend yields and betas based the goal of each portfolio.

Explain why you believe each investment chosen is a good choice based on fundamental analysis.

Minimizing Financial Risk- Dividend Discount Model

Explain what type of business each stock choice represents, and information about the financial position of each company. Be sure your portfolios are diversified and all your investments aren’t in the same type of business. Finally, put all your investments for each portfolio into a table. Show the amount of money in each investment in the table. The beta for each stock chosen, the dividend yield for each stock chosen, and the coupon rate for each bond chosen.

Be sure to discuss: Reasons for your investment choices Stock investment risk and return factors based on beta Bond interest rate risk. Part 2: Briefly discuss the concepts of the dividend discount model. In addition, be sure to show the DDM formula. However, your response should contaioxin 1200 – 1400 words and a table.

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