Tareq Awadallah

Written Assignment – Unit 4 The case study is about the financial analysis of the portfolio provided. It consists of a group of stocks which are yielding certain amount of cash for the investor. Usually, this yield is released annually or biannually. The final result of the analysis is the weighted average yield of the portfolio, to figure out how much the investor is paid, and what are the recommendations for actions need to be done in order to increase the final yield. Some initial information are given in the portfolio, such as the number of shares for each position, current market price per stock, and the estimated dividend paid to the investor. Those information are used to calculate the current market value of each position, the estimated current yield, the weighted average factor, and the weighted average yield. The following formulas are used to do the calculations. CURRENT MARKET VALUE = CURRENT MARKET PRICE x NUMBER OF SHARES ESTIMATED CURRENT YIELD = (ESTIMATED DIVIDEND / CURRENT MARKET VALUE) x 100 WEIGHTED AVERAGE FACTOR = CURRENT MARKET VALUE / TOTAL PORTFOLIO MARKET VALUE WEIGHTED AVERAGE YIELD = ESTIMATED CURRENT YIELD x WEIGHTED AVERAGE FACTOR The following is the result of the calculations, Type of Investment Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Company Name Stock Symbol No. of shares) Current Market Price Current Market Value Estimated Dividend Estimated Current Yield Weighted Average Factor Weighted Average Yield Altria MO 119 50.04 $5,954.76 $247.00 4.15% - 0.47% AT&T T 173 32.09 $5,551.57 $325.00 5.85% - 0.61% Chevron CVX 26 125.82 $3,271.32 $111.00 3.39% - 0.21% Coca Cola KO 59 54.33 $3,205.47 $77.00 2.40% - 0.15% DUK 65 87.68 $5,699.20 $206.00 3.61% - 0.39% JNJ 31 128.84 $3,994.04 $86.00 2.15% - 0.16% McDonalds MCD 52 214.31 $11,144.12 $176.00 1.58% - 0.33% Pepsi Cola PEP 17 130.74 $2,222.58 $44.00 1.98% - 0.08% Philip Morris Intl PM 70 86.75 $6,072.50 $280.00 4.61% - 0.53% Duke Energy Johnson & Johnson Common stock Proctor & Gamble PG 52 113.85 $5,920.20 Total Portfolio Market Value $53,035.76 $133.00 2.25% - 0.25% 1 Weighted Average Yield: 3.18% As shown in the table, the weighted average yield is the percentage that the investor is getting out of the total investment in the portfolio. In general, a 5% – 10% average yield is considered good return of the bond or stock investment, but the calculated one is lower than that, which is due to some low-yield stocks. The cost based yield, or as known as Yield on Cost (YOC), is the yield that calculated with the respect to the initial market price of the stock, while the current yield is calculated with the respect to the current market price (Fernando, n.d.). The YOC is used to measure the growth of the stock over time, as it’s associated with the initial price. It’s also a measure of the long-term benefits that the investor can have when holding such a stock for long time. On the other hand, the current yield is used to measure the current earning that an investor can expect from a certain investment, based on the current market price of the stock or bond (Chen, n.d.). For a conclusion, the analysis shows a quit low yield expected from the portfolio, however, some few changes can make a difference in the yield. For example, selling some low yield stocks and buying higher ones can increase the final income. References: Fernando, J. (n.d.). Yield on cost (YOC). Stock Trading – Investopedia.com. Retrieved from https://www.investopedia.com/terms/y/yield-on-cost.asp Chen, J. (n.d.). Yield. Fixed Income Essentials https://www.investopedia.com/terms/y/yield.asp – Investopedia.com. Retrieved from