University of South Florida Mr and Mrs Kent Investment Analysis Excel Sheet

Mr. and Mrs. Kentcontacted us (the financial advice firm you work for) because they need some help with investing in fixed income. They own their own house; they already have equity investments, and they are considering investing$300,000 in fixed income. They tell us that they are interested in an investing horizon of about 20 years. We must respondto thesequestions:

1.A) What are the fixed income investments we should consider? (Hint: Simply write their names in a list.)B) What do you recommend for us among CDs, treasuries, and corporate bonds? (Hint: discuss yields foreachwith, for example, the information available at vanguard.com.)

2.A) Find a suitablecorporate bond at vanguard.com–highest possible grade, not callable, not convertible, about 20 years maturity.B) Prepare a table of cash flows for the bond you have selected, and the Kent’s $300,000 investing budget. (Note: picture–example given in the cash–flows tab in the file “teaching–f20–fixed–income–annotated–2.xlsx”.In order to best learn, you must do this by yourself.)

3.A) Are annual cash–flows over $15,000for the bond investment you have selected? (Hint: simply answer Yes, or No.)B) What could we do if the cash flows were less than $15,000 per year?(Hint: remember the classroom discussion about possible bond portfolio management strategies for the Kents.)

4.How does acorporate bond investment compare with investing in bond mutual funds? (Find a corporate bond mutual funds at vanguard.com, or at any other site you may find).

5.What about immediate annuities? Should we use the single corporate bond or the insurance annuities? We are both 65 years old. (Hint: go to immediateannuities.com, input our data, copy & paste the data in your report, and briefly explain the relevant numbers.)