Investment Analysis Project: Finance Module, Semester 1, University
VerifiedAdded on 2022/09/18
|15
|3747
|29
Project
AI Summary
This investment analysis project presents a comprehensive portfolio strategy for a 65-year-old client nearing retirement, with a focus on bond and equity investments. The analysis begins with an overview of the client's profile, risk tolerance, and financial goals, emphasizing a low-risk approach due to the client's reliance on investment income. The project allocates €1,000,000 across bonds (70%), equity (15%), and cash equivalents (15%), primarily selecting Irish government and corporate bonds for their safety and potential returns. A detailed analysis of specific bonds, including Irland 2045 and UNICR.BK IR. 16/23 MTN, is conducted, considering historical performance, current market conditions, and economic factors like interest rate changes and the impact of the COVID-19 pandemic. The report also includes a profile-based investment strategy, portfolio statement, and a comprehensive analysis of the selected bonds, providing insights into their yields, durations, and potential risks and rewards. The project demonstrates the application of financial principles in portfolio management and investment decision-making, offering a practical guide for financial planning in a volatile market.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
Running head: INVESTMENT ANALYSIS PROJECT
Investment Analysis Project
Name of the Student:
Name of the University:
Author’s Note:
Investment Analysis Project
Name of the Student:
Name of the University:
Author’s Note:
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1INVESTMENT ANALYSIS PROJECT
Table of Contents
Portfolio Overview..........................................................................................................................2
Profile based Investment Strategy...................................................................................................3
Investment Portfolio Statement.......................................................................................................4
Comprehensive Analysis.................................................................................................................6
Government Bond........................................................................................................................6
Irland 2045 Bond.....................................................................................................................6
IrlandEO-Treasury Bonds 2019(50)........................................................................................8
Corporate Bonds..........................................................................................................................9
Current and Future Market Scenario.........................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
Appendix........................................................................................................................................14
Table of Contents
Portfolio Overview..........................................................................................................................2
Profile based Investment Strategy...................................................................................................3
Investment Portfolio Statement.......................................................................................................4
Comprehensive Analysis.................................................................................................................6
Government Bond........................................................................................................................6
Irland 2045 Bond.....................................................................................................................6
IrlandEO-Treasury Bonds 2019(50)........................................................................................8
Corporate Bonds..........................................................................................................................9
Current and Future Market Scenario.........................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
Appendix........................................................................................................................................14
2INVESTMENT ANALYSIS PROJECT
Portfolio Overview
The portfolio analysis has been well done for the Mr John who is currently at the age of
65 and would be retiring soon. The portfolio for Mr John has been well prepared based in the
current market conditions and the marker factors which would be well affecting the performance
of the investment. Investment key factors like investment objectives, goals, risk and return
objectives would be some of the key basis upon which the investment would be decided and the
assets would be allocated accordingly for the client. The asset would be comprising of the three
key assets and that would be particularly in the field of the bonds, assets and cash & cash
equivalents. The amount that would be well invested into the wide range of assets would be
around €1,000,000 and of which we do expect that the majority of the amount would be invested
into bonds. Investment into bonds would be done accordingly in the government and corporate
bonds depending upon the investment goals and objective. From a proportion and weightage
basis it is well analysed that around 70% of the amount would be invested into corporate and
government bonds, 15% in Equity Stock Market and another 15% would be kept as cash and
cash equivalents for the client. The list of stocks and bonds that would be well selected for the
purpose of investment would be from Ireland. Analysis of assets such as stocks and bonds would
be well done after well analysing the historical performance of the assets and future performance
of the assets class. Key economic factors like interest rate, inflation rate and the market growth
rates are some of the key factors which have been well considered for the purpose of analysis
and would be well considered for the analysis purpose for the client. Now, based on the client
profile, risk and return estimates we well suggest that the client takes a low amount of risk and
investment allocation would be done accordingly for the purpose of investment. So a major
portion that is 15% of amount would be well kept in cash so that in these hard investing time
“cash acts as a king” for the client. The proposed asset allocation for Mr John our client would
be as follows:
Investment Portfolio
Asset Class Weightage (%) Amount (€)
Bonds 70% € 700,000
Equity 15% € 150,000
Cash & Cash Equivalent 15% € 150,000
Total 100% € 1,000,000
Portfolio Overview
The portfolio analysis has been well done for the Mr John who is currently at the age of
65 and would be retiring soon. The portfolio for Mr John has been well prepared based in the
current market conditions and the marker factors which would be well affecting the performance
of the investment. Investment key factors like investment objectives, goals, risk and return
objectives would be some of the key basis upon which the investment would be decided and the
assets would be allocated accordingly for the client. The asset would be comprising of the three
key assets and that would be particularly in the field of the bonds, assets and cash & cash
equivalents. The amount that would be well invested into the wide range of assets would be
around €1,000,000 and of which we do expect that the majority of the amount would be invested
into bonds. Investment into bonds would be done accordingly in the government and corporate
bonds depending upon the investment goals and objective. From a proportion and weightage
basis it is well analysed that around 70% of the amount would be invested into corporate and
government bonds, 15% in Equity Stock Market and another 15% would be kept as cash and
cash equivalents for the client. The list of stocks and bonds that would be well selected for the
purpose of investment would be from Ireland. Analysis of assets such as stocks and bonds would
be well done after well analysing the historical performance of the assets and future performance
of the assets class. Key economic factors like interest rate, inflation rate and the market growth
rates are some of the key factors which have been well considered for the purpose of analysis
and would be well considered for the analysis purpose for the client. Now, based on the client
profile, risk and return estimates we well suggest that the client takes a low amount of risk and
investment allocation would be done accordingly for the purpose of investment. So a major
portion that is 15% of amount would be well kept in cash so that in these hard investing time
“cash acts as a king” for the client. The proposed asset allocation for Mr John our client would
be as follows:
Investment Portfolio
Asset Class Weightage (%) Amount (€)
Bonds 70% € 700,000
Equity 15% € 150,000
Cash & Cash Equivalent 15% € 150,000
Total 100% € 1,000,000
3INVESTMENT ANALYSIS PROJECT
Profile based Investment Strategy
The profile of the client for Mr John, has been well done by taking the return objectives,
risk constraints, time horizon and liquidity constraints for Mr John. The current age for Mr John
is around 65, and he is currently having more approach towards safer investment. Investment in
bonds would be considered for Mr John, and he would be well investing based on a time horizon
for 10-Years in which he expects to allocate the amount in a well-diversified manner. Given the
current situation that is Outbreak of pandemic disease COVID-19 has affected majorly all sectors
of the economies and the global economy has moved towards recession. Major actions are being
taken at the government side by quantitative easing that is by injecting money into the money.
On the other hand, the Central Banks have also taken measures (Ireland Stock Market (ISEQ) |
1989-2020 Data | 2021-2022 Forecast | Quote | Chart 2020). Now these key set of factors needs
to be well aligned with that of the client so that a right set of strategy is built up. Considering the
fact bond investment would be given a prior importance a set of bonds have been well selected
for the client. There are two government bonds which are Irland 2045 Bond and Irland 19/50
Bond selected. On the other hand, the corporate bond that has been well selected for the purpose
of analysis is the UNICR.BK IR. 16/23 MTN Bond (Ireland Government Bond 10Y | 1985-2020
Data | 2021-2022 Forecast | Quote | Chart 2020). The four key equity stocks in which our
investment would be done will be CRH PLC, Grafton Group PLC, Johnson Controls
International PLC and Ryanair Holdings PLC. Further the investment in the cash and cash
equivalent is estimated to be well kept at the prevailing risk free rate of about 1.4% and which
would be safest bet given the current economic and social factors. Now since, the client would be
well making his living out from the investment we got to consider asset classes and instruments
which not only generates a steady income, but also preserves the invested capital (Ireland
Government Bonds - Investing.com 2020). Now well considering the given facts and
considerations about the asset class the proportionate weight that would be placed in bond will
be 70%, Cash and Equity 15% respectively. Now these set of investment has been well designed
as per the client risk, return, liquidity and time horizon that has been well placed by the client
(Irish Stock Exchange - Irish Government Bonds, 2020).
Profile based Investment Strategy
The profile of the client for Mr John, has been well done by taking the return objectives,
risk constraints, time horizon and liquidity constraints for Mr John. The current age for Mr John
is around 65, and he is currently having more approach towards safer investment. Investment in
bonds would be considered for Mr John, and he would be well investing based on a time horizon
for 10-Years in which he expects to allocate the amount in a well-diversified manner. Given the
current situation that is Outbreak of pandemic disease COVID-19 has affected majorly all sectors
of the economies and the global economy has moved towards recession. Major actions are being
taken at the government side by quantitative easing that is by injecting money into the money.
On the other hand, the Central Banks have also taken measures (Ireland Stock Market (ISEQ) |
1989-2020 Data | 2021-2022 Forecast | Quote | Chart 2020). Now these key set of factors needs
to be well aligned with that of the client so that a right set of strategy is built up. Considering the
fact bond investment would be given a prior importance a set of bonds have been well selected
for the client. There are two government bonds which are Irland 2045 Bond and Irland 19/50
Bond selected. On the other hand, the corporate bond that has been well selected for the purpose
of analysis is the UNICR.BK IR. 16/23 MTN Bond (Ireland Government Bond 10Y | 1985-2020
Data | 2021-2022 Forecast | Quote | Chart 2020). The four key equity stocks in which our
investment would be done will be CRH PLC, Grafton Group PLC, Johnson Controls
International PLC and Ryanair Holdings PLC. Further the investment in the cash and cash
equivalent is estimated to be well kept at the prevailing risk free rate of about 1.4% and which
would be safest bet given the current economic and social factors. Now since, the client would be
well making his living out from the investment we got to consider asset classes and instruments
which not only generates a steady income, but also preserves the invested capital (Ireland
Government Bonds - Investing.com 2020). Now well considering the given facts and
considerations about the asset class the proportionate weight that would be placed in bond will
be 70%, Cash and Equity 15% respectively. Now these set of investment has been well designed
as per the client risk, return, liquidity and time horizon that has been well placed by the client
(Irish Stock Exchange - Irish Government Bonds, 2020).
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
4INVESTMENT ANALYSIS PROJECT
70%
15%
15%
Investment Portfolio
Bonds
Equity
Cash & Cash Equivalent
Investment Portfolio Statement
The investment portfolio statement for a client well guides a fund/portfolio manager to
well understand the goals, objective, risk, return and liquidity constraints that a client has and the
same has been well assessed with the help of the IPS that has been drawn.
Risk Objective: Low Risk potential as the client would be largely dependent on the
investment portfolio for the purpose of his living.
Return Objective: John is currently having a moderate set of requirement that his
portfolio should earn a rate that beats inflations and earns greater than the risk free rate of
return.
Liquidity Constraints: Liquidity constraint has been well placed by the client in terms
of emergency fund that he may well require and this may be due to medical emergencies
and unplanned expenses. Further a continuous or a stable amount of cash flows is well
desired by the client so that his expenses are well covered.
Time Horizon: The time horizon for the portfolio that the client has well suggested is for
a time period of 3-Years from which the client would be well spending the amount in
accordance with his personal choices and willingness.
70%
15%
15%
Investment Portfolio
Bonds
Equity
Cash & Cash Equivalent
Investment Portfolio Statement
The investment portfolio statement for a client well guides a fund/portfolio manager to
well understand the goals, objective, risk, return and liquidity constraints that a client has and the
same has been well assessed with the help of the IPS that has been drawn.
Risk Objective: Low Risk potential as the client would be largely dependent on the
investment portfolio for the purpose of his living.
Return Objective: John is currently having a moderate set of requirement that his
portfolio should earn a rate that beats inflations and earns greater than the risk free rate of
return.
Liquidity Constraints: Liquidity constraint has been well placed by the client in terms
of emergency fund that he may well require and this may be due to medical emergencies
and unplanned expenses. Further a continuous or a stable amount of cash flows is well
desired by the client so that his expenses are well covered.
Time Horizon: The time horizon for the portfolio that the client has well suggested is for
a time period of 3-Years from which the client would be well spending the amount in
accordance with his personal choices and willingness.
5INVESTMENT ANALYSIS PROJECT
Selection of Assets in Portfolio
Selection of portfolio in the assets needs to be well done after well considering the
various range of economic and social factors which can well affect the asset class performance.
Economic Reasons: The Outbreak of COVID-19 has thrown a global stock market into a loop
with the DJIA Index falling by more than 30%. Now most bond investors has gained due to this
with falling interest rates and rising prices. The yield on bonds have fallen sharply as Central
Banks all across the globe start cutting interest rates, and it is quite natural to well think that the
falling yields would be making the bonds less desirable. However, it is important to note that
when the yield on bond falls, prices for the existing bonds that have been issued rises. This is
primarily because that these existing bonds well pay a higher interest rate, that well looks more
attractive when the current or prevailing interest rates are been well considered that usually go
down on new issued bonds.
Now, if the maturity of the bond is of longer period, if the interest rates drops like what is
happening currently the prices would be falling further for the bonds. It is worth to note that on a
historic basis, bonds have been a sound alternative to stock investment during the time of trouble
and crisis. Now, government bonds in particular are more preferred and selected by the clients
for the purpose of investments as they are fully backed by government and gives them the
outmost surety for investment. In the current scenario of uncertainty and high market risk it is
important that the investment of the client should be well done in certain type of assets which are
not only safe but can provide a decent return. Safety and preserving the capital from market
should shocks would be our key concerns and the same has been well followed by investing a
major amount into government bonds due to strong backup power and less risky.
Bonds: The bonds that would be well selected for the purpose of investment will be government
and corporate bonds, whereby a sum of €700,000, would be well invested into these sets on an
equal proportionate basis. There are two government bonds which are Irland 2045 Bond and
Irland 19/50 Bond selected. On the other hand, the corporate bond that has been well selected for
the purpose of analysis is the UNICR.BK IR. 16/23 MTN Bond.
Selection of Assets in Portfolio
Selection of portfolio in the assets needs to be well done after well considering the
various range of economic and social factors which can well affect the asset class performance.
Economic Reasons: The Outbreak of COVID-19 has thrown a global stock market into a loop
with the DJIA Index falling by more than 30%. Now most bond investors has gained due to this
with falling interest rates and rising prices. The yield on bonds have fallen sharply as Central
Banks all across the globe start cutting interest rates, and it is quite natural to well think that the
falling yields would be making the bonds less desirable. However, it is important to note that
when the yield on bond falls, prices for the existing bonds that have been issued rises. This is
primarily because that these existing bonds well pay a higher interest rate, that well looks more
attractive when the current or prevailing interest rates are been well considered that usually go
down on new issued bonds.
Now, if the maturity of the bond is of longer period, if the interest rates drops like what is
happening currently the prices would be falling further for the bonds. It is worth to note that on a
historic basis, bonds have been a sound alternative to stock investment during the time of trouble
and crisis. Now, government bonds in particular are more preferred and selected by the clients
for the purpose of investments as they are fully backed by government and gives them the
outmost surety for investment. In the current scenario of uncertainty and high market risk it is
important that the investment of the client should be well done in certain type of assets which are
not only safe but can provide a decent return. Safety and preserving the capital from market
should shocks would be our key concerns and the same has been well followed by investing a
major amount into government bonds due to strong backup power and less risky.
Bonds: The bonds that would be well selected for the purpose of investment will be government
and corporate bonds, whereby a sum of €700,000, would be well invested into these sets on an
equal proportionate basis. There are two government bonds which are Irland 2045 Bond and
Irland 19/50 Bond selected. On the other hand, the corporate bond that has been well selected for
the purpose of analysis is the UNICR.BK IR. 16/23 MTN Bond.
6INVESTMENT ANALYSIS PROJECT
Comprehensive Analysis
The comprehensive analysis has been well carried out for the bond with the help of
historical performance, future events that can well affect the performance. The key set of actions
like changes in interest rate, government policies and open market purchases are some of the key
actions that directly influences the prices of the bond. Some of the key actions that are taken by
the Central Bank are as follows:
12 March 2020: The European Central Bank (ECB) Monetary decision was well taken
as a package measure that has been well announced in order to support the bank lending.
18 March 2020: The Central Bank would be well reducing the Countercyclical Capital
Buffer (CCyB), that is the buffer that was offered to Irish Bank were well reduced from
1% to 0% in order to support the flow of credit in the economy. At the same time, the
ECB also announced a €750 Billion bond purchase scheme.
Government Bond
Irland 2045 Bond
The bond is issued by the government of Ireland which is currently trading at a price of
€128.10. Now considering the historical price performance the bond price has well increased
from €112.24 to a high of €128.10. Now, the key reason can be well explained by the actions and
move taken by the central bank which is reducing the interest rates, which in turn has increased
the bond price. In the last three month the price of bonds have increased rapidly as seen from the
below chart that is from €128 to €142 that is in the period of Jan to March (Long-Term
Government Bond Yields: 10-year: Main (Including Benchmark) for Ireland 2020). However
recently we have well observed that the prices of bonds have started showing a downward slope
as market expects everything to well settle down and start investing into other asset classes given
their risk preferences. The Bond pays a fixed coupon of 2% and would be well maturing in the
year 2045 (IRLANDEO-TREASURY BONDS 2015(45) Bond).
Code number
A1ZVUJ
ISIN
IE00BV8C9186
Issuer
Irland, Republik
Security type
International Public Sector Bonds
Comprehensive Analysis
The comprehensive analysis has been well carried out for the bond with the help of
historical performance, future events that can well affect the performance. The key set of actions
like changes in interest rate, government policies and open market purchases are some of the key
actions that directly influences the prices of the bond. Some of the key actions that are taken by
the Central Bank are as follows:
12 March 2020: The European Central Bank (ECB) Monetary decision was well taken
as a package measure that has been well announced in order to support the bank lending.
18 March 2020: The Central Bank would be well reducing the Countercyclical Capital
Buffer (CCyB), that is the buffer that was offered to Irish Bank were well reduced from
1% to 0% in order to support the flow of credit in the economy. At the same time, the
ECB also announced a €750 Billion bond purchase scheme.
Government Bond
Irland 2045 Bond
The bond is issued by the government of Ireland which is currently trading at a price of
€128.10. Now considering the historical price performance the bond price has well increased
from €112.24 to a high of €128.10. Now, the key reason can be well explained by the actions and
move taken by the central bank which is reducing the interest rates, which in turn has increased
the bond price. In the last three month the price of bonds have increased rapidly as seen from the
below chart that is from €128 to €142 that is in the period of Jan to March (Long-Term
Government Bond Yields: 10-year: Main (Including Benchmark) for Ireland 2020). However
recently we have well observed that the prices of bonds have started showing a downward slope
as market expects everything to well settle down and start investing into other asset classes given
their risk preferences. The Bond pays a fixed coupon of 2% and would be well maturing in the
year 2045 (IRLANDEO-TREASURY BONDS 2015(45) Bond).
Code number
A1ZVUJ
ISIN
IE00BV8C9186
Issuer
Irland, Republik
Security type
International Public Sector Bonds
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
7INVESTMENT ANALYSIS PROJECT
Country
Ireland
Home market
Irish Stock Exchange
Market segment
Berlin Open Market
Nominal currency
Euro
Coupon Type
n/a
Coupon
Fixed
.
Bond Key
Details: The IrlandEO-Treasury Bonds 2015(45) details are as follows:
Yield: 0.67%. This shows the yield that an investor can well generate from the bond
given the current bond prices and interest rate.
Coupon: 2.00%. The bond would be paying a fixed coupon payment of 2%.
Duration: 20.5062. The duration goes to show the changes that would be observed in the
bond prices if the interest rate well change by 1%.
Country
Ireland
Home market
Irish Stock Exchange
Market segment
Berlin Open Market
Nominal currency
Euro
Coupon Type
n/a
Coupon
Fixed
.
Bond Key
Details: The IrlandEO-Treasury Bonds 2015(45) details are as follows:
Yield: 0.67%. This shows the yield that an investor can well generate from the bond
given the current bond prices and interest rate.
Coupon: 2.00%. The bond would be paying a fixed coupon payment of 2%.
Duration: 20.5062. The duration goes to show the changes that would be observed in the
bond prices if the interest rate well change by 1%.
8INVESTMENT ANALYSIS PROJECT
Currency: EUR. The principal repayment and coupon repayment would be well paid in
EUR Currency.
No of Payments Frequency: Annual Coupon.
IrlandEO-Treasury Bonds 2019(50)
The Irland Treasury bond has been issued till the maturity date for the year 2050, the
annual coupon payment for the bond would be paid at the rate of 1.50% (IRLANDEO-
TREASURY BONDS 2019(50)). The rating that has been assigned to the bond by the Moody’s
Rating Agency has been A2, which falls under the Investment grade Category. In terms of
historical performance the bond has well shown a increase from a level of €113 to €129.5 in the
period of Jan to March as the interest rates have shown a steady fall in this period of time (RBC
Wealth Management 2020).
Code number
A2R13T
ISIN
IE00BH3SQB22
Issuer
Irland, Republik
Security type
Fixed Interest, Public Sector Bonds
Country
Ireland
Home market
Irish Stock Exchange
Market segment
Berlin Open Market
Nominal currency
Euro
Coupon Type
annually
Coupon
Fixed
Last trading day
15/05/2050
Bond Key Details: The IrlandEO-Treasury Bonds 2015(45) details are as follows:
Yield: 0.90%. This shows the yield that an investor can well generate from the bond
given the current bond prices and interest rate and this bond although has a long term
Currency: EUR. The principal repayment and coupon repayment would be well paid in
EUR Currency.
No of Payments Frequency: Annual Coupon.
IrlandEO-Treasury Bonds 2019(50)
The Irland Treasury bond has been issued till the maturity date for the year 2050, the
annual coupon payment for the bond would be paid at the rate of 1.50% (IRLANDEO-
TREASURY BONDS 2019(50)). The rating that has been assigned to the bond by the Moody’s
Rating Agency has been A2, which falls under the Investment grade Category. In terms of
historical performance the bond has well shown a increase from a level of €113 to €129.5 in the
period of Jan to March as the interest rates have shown a steady fall in this period of time (RBC
Wealth Management 2020).
Code number
A2R13T
ISIN
IE00BH3SQB22
Issuer
Irland, Republik
Security type
Fixed Interest, Public Sector Bonds
Country
Ireland
Home market
Irish Stock Exchange
Market segment
Berlin Open Market
Nominal currency
Euro
Coupon Type
annually
Coupon
Fixed
Last trading day
15/05/2050
Bond Key Details: The IrlandEO-Treasury Bonds 2015(45) details are as follows:
Yield: 0.90%. This shows the yield that an investor can well generate from the bond
given the current bond prices and interest rate and this bond although has a long term
9INVESTMENT ANALYSIS PROJECT
maturity but has still been considered due to the high yield that has been generated (1,5%
Irland, Republik (2050 - IE00BH3SQB22 - Börse Berlin (2020)).
Coupon: 1.50%. The bond would be paying a fixed coupon payment of 1.5%.
Duration: 24.623. The duration goes to show the changes that would be observed in the
bond prices if the interest rate well change by 1%.
Currency: EUR. The principal repayment and coupon repayment would be well paid in
EUR Currency.
Corporate Bonds
The corporate bond that has been well selected for the purpose of analysis is the UNICR.BK IR.
16/23 MTN Bond. The bond is currently priced at €98.39. The maturity of the bond would be
happening in the year 2023. The annual coupon rate that is well offered by the bond is around
0.95% of the face value (UNICREDIT BANK IRELAND PLCEO-MEDIUM-TERM NOTES
2016(23)).
maturity but has still been considered due to the high yield that has been generated (1,5%
Irland, Republik (2050 - IE00BH3SQB22 - Börse Berlin (2020)).
Coupon: 1.50%. The bond would be paying a fixed coupon payment of 1.5%.
Duration: 24.623. The duration goes to show the changes that would be observed in the
bond prices if the interest rate well change by 1%.
Currency: EUR. The principal repayment and coupon repayment would be well paid in
EUR Currency.
Corporate Bonds
The corporate bond that has been well selected for the purpose of analysis is the UNICR.BK IR.
16/23 MTN Bond. The bond is currently priced at €98.39. The maturity of the bond would be
happening in the year 2023. The annual coupon rate that is well offered by the bond is around
0.95% of the face value (UNICREDIT BANK IRELAND PLCEO-MEDIUM-TERM NOTES
2016(23)).
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
10INVESTMENT ANALYSIS PROJECT
The key data of the bond are as follows:
Yield: 0.54%. This shows the yield that an investor can well generate from the bond
given the current bond prices and interest rate, the short-term corporate bond would be
well catering the need of the investor that is liquidity and cash requirement i-n the future
term period as the bond will be maturing in the year 2023.
Coupon: 0.96%. The bond would be paying a fixed coupon payment of 0.96%.
Duration: 3.11. The duration goes to show the changes that would be observed in the
bond prices if the interest rate well change by 1%. Now the duration of this corporate
bond has been specifically very low and this has been the key reason why the bond has
been selected even if it is offering a lower set of returns than other bonds trading in the
market. So risk aspects and interest rate sensitivity were given prior concern while
selecting the bond.
Currency: EUR. The principal repayment and coupon repayment would be well paid in
EUR Currency.
Current and Future Market Scenario
Mario Draghi is engaged in some Ireland companies. Draghi will devouring up corporate
bonds for the first time as the European Central Bank recent push was €1.7 trillion quantitative
easing program to revive the Eurozone inflation rate and growth of the country (Environmental
Finance 2020). In March, the European Central Bank cut its interest rate to zero as it has been
purchasing government bonds for more than a year and now the bank plans to start its ‘Kitchen
sink moment’ by using its corporate bond buying plan. By implementing this plan there will be a
recovery in the Eurozone and even preventing 19-member currency sinking into a deflationary
spiral. Due to this plan, European companies were able to sell €50 billion of bonds. State-owned
companies of Ireland ESB and DAA, even Glanbia co-operative society took part in the bond
bonanza (Caplinger, 2019). If the ECB is entering into market, it can be assumed that the cost of
increasing the corporate debt will be low and the big purchasers will remain behind in the market
competition. Ryan McGrath claimed that the bank main concerned was that buying of bonds
cannot paved their way in the public domain instead they were limited to the banks only. The
main aim of the new plan is to motivate the companies to take more debt and use their savings
for the expansion and growth of the business thus, it will create more employment opportunities
The key data of the bond are as follows:
Yield: 0.54%. This shows the yield that an investor can well generate from the bond
given the current bond prices and interest rate, the short-term corporate bond would be
well catering the need of the investor that is liquidity and cash requirement i-n the future
term period as the bond will be maturing in the year 2023.
Coupon: 0.96%. The bond would be paying a fixed coupon payment of 0.96%.
Duration: 3.11. The duration goes to show the changes that would be observed in the
bond prices if the interest rate well change by 1%. Now the duration of this corporate
bond has been specifically very low and this has been the key reason why the bond has
been selected even if it is offering a lower set of returns than other bonds trading in the
market. So risk aspects and interest rate sensitivity were given prior concern while
selecting the bond.
Currency: EUR. The principal repayment and coupon repayment would be well paid in
EUR Currency.
Current and Future Market Scenario
Mario Draghi is engaged in some Ireland companies. Draghi will devouring up corporate
bonds for the first time as the European Central Bank recent push was €1.7 trillion quantitative
easing program to revive the Eurozone inflation rate and growth of the country (Environmental
Finance 2020). In March, the European Central Bank cut its interest rate to zero as it has been
purchasing government bonds for more than a year and now the bank plans to start its ‘Kitchen
sink moment’ by using its corporate bond buying plan. By implementing this plan there will be a
recovery in the Eurozone and even preventing 19-member currency sinking into a deflationary
spiral. Due to this plan, European companies were able to sell €50 billion of bonds. State-owned
companies of Ireland ESB and DAA, even Glanbia co-operative society took part in the bond
bonanza (Caplinger, 2019). If the ECB is entering into market, it can be assumed that the cost of
increasing the corporate debt will be low and the big purchasers will remain behind in the market
competition. Ryan McGrath claimed that the bank main concerned was that buying of bonds
cannot paved their way in the public domain instead they were limited to the banks only. The
main aim of the new plan is to motivate the companies to take more debt and use their savings
for the expansion and growth of the business thus, it will create more employment opportunities
11INVESTMENT ANALYSIS PROJECT
and will even increase the economic growth. A 15-year old bond is sold last Tuesday having an
interest rate of 1.875 percent thus saving millions of euro that must have used in payment of
interest.
Conclusion
The portfolio analysis that has been specifically carried out by analyzing the wide range
of asset over which the investment can be well done for the client. The key basis for the purpose
of selecting and analyzing the bond has been well done with the help of the current market
scenario, economic and future conditions that would be well influencing the performance of the
portfolio. The investment in bond has been detailed in a comprehensive manner as it would be
comprising the majority of the investment. On the other hand we do expect to invest in the
Ireland Stock Exchange around 15% of the amount and another 15% in the risk free rate that
would be in the form of cash and cash equivalents for the company. On an average it is well
expected that the portfolio can earn a return that is close to 2%.
and will even increase the economic growth. A 15-year old bond is sold last Tuesday having an
interest rate of 1.875 percent thus saving millions of euro that must have used in payment of
interest.
Conclusion
The portfolio analysis that has been specifically carried out by analyzing the wide range
of asset over which the investment can be well done for the client. The key basis for the purpose
of selecting and analyzing the bond has been well done with the help of the current market
scenario, economic and future conditions that would be well influencing the performance of the
portfolio. The investment in bond has been detailed in a comprehensive manner as it would be
comprising the majority of the investment. On the other hand we do expect to invest in the
Ireland Stock Exchange around 15% of the amount and another 15% in the risk free rate that
would be in the form of cash and cash equivalents for the company. On an average it is well
expected that the portfolio can earn a return that is close to 2%.
12INVESTMENT ANALYSIS PROJECT
References
1,5% Irland, Republik (2050 - IE00BH3SQB22 - Börse Berlin (2020). Available at:
https://www.boerse-berlin.com/index.php/Bonds?isin=IE00BH3SQB22 (Accessed: 14 April
2020).
1,5% Irland, Republik (2050) - IE00BH3SQB22 - Börse Berlin (2020). Available at:
https://www.boerse-berlin.com/index.php/Bonds?isin=IE00BH3SQB22 (Accessed: 14 April
2020).
2% Irland, Republik (2045) - IE00BV8C9186 - Börse Berlin (2020). Available at:
https://www.boerse-berlin.com/index.php/Bonds?isin=IE00BV8C9186 (Accessed: 14 April
2020).
Buy Government and Corporate Bonds | Davy Select (2020). Available at:
https://www.davyselect.ie/investment-choices/bonds.html (Accessed: 14 April 2020).
Caplinger, D. (2019) A Foolish Take: The Investment That Keeps Surprising Wall Street | The
Motley Fool, The Motley Fool. Available at: https://www.fool.com/investing/2019/06/03/a-
foolish-take-the-investment-that-keeps-surprisin.aspx (Accessed: 14 April 2020).
COVID-19 (Coronavirus) (2020). Available at: https://www.centralbank.ie/consumer-hub/covid-
19 (Accessed: 14 April 2020).
COVID-19: Updates on market impacts - RBC Wealth Management 2020. Available at:
https://www.rbcwealthmanagement.com/us/en/research-insights/coronavirus-latest-market-
updates/detail/?utm_id=wm1557319578247030 (Accessed: 14 April 2020).
Ireland Government Bond 10Y | 1985-2020 Data | 2021-2022 Forecast | Quote | Chart 2020.
Available at: https://tradingeconomics.com/ireland/government-bond-yield (Accessed: 14 April
2020).
Ireland Government Bonds - Investing.com 2020. Available at: https://www.investing.com/rates-
bonds/ireland-government-bonds (Accessed: 14 April 2020).
References
1,5% Irland, Republik (2050 - IE00BH3SQB22 - Börse Berlin (2020). Available at:
https://www.boerse-berlin.com/index.php/Bonds?isin=IE00BH3SQB22 (Accessed: 14 April
2020).
1,5% Irland, Republik (2050) - IE00BH3SQB22 - Börse Berlin (2020). Available at:
https://www.boerse-berlin.com/index.php/Bonds?isin=IE00BH3SQB22 (Accessed: 14 April
2020).
2% Irland, Republik (2045) - IE00BV8C9186 - Börse Berlin (2020). Available at:
https://www.boerse-berlin.com/index.php/Bonds?isin=IE00BV8C9186 (Accessed: 14 April
2020).
Buy Government and Corporate Bonds | Davy Select (2020). Available at:
https://www.davyselect.ie/investment-choices/bonds.html (Accessed: 14 April 2020).
Caplinger, D. (2019) A Foolish Take: The Investment That Keeps Surprising Wall Street | The
Motley Fool, The Motley Fool. Available at: https://www.fool.com/investing/2019/06/03/a-
foolish-take-the-investment-that-keeps-surprisin.aspx (Accessed: 14 April 2020).
COVID-19 (Coronavirus) (2020). Available at: https://www.centralbank.ie/consumer-hub/covid-
19 (Accessed: 14 April 2020).
COVID-19: Updates on market impacts - RBC Wealth Management 2020. Available at:
https://www.rbcwealthmanagement.com/us/en/research-insights/coronavirus-latest-market-
updates/detail/?utm_id=wm1557319578247030 (Accessed: 14 April 2020).
Ireland Government Bond 10Y | 1985-2020 Data | 2021-2022 Forecast | Quote | Chart 2020.
Available at: https://tradingeconomics.com/ireland/government-bond-yield (Accessed: 14 April
2020).
Ireland Government Bonds - Investing.com 2020. Available at: https://www.investing.com/rates-
bonds/ireland-government-bonds (Accessed: 14 April 2020).
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
13INVESTMENT ANALYSIS PROJECT
Ireland Stock Market (ISEQ) | 1989-2020 Data | 2021-2022 Forecast | Quote | Chart 2020.
Available at: https://tradingeconomics.com/ireland/stock-market (Accessed: 14 April 2020).
Irish Stock Exchange - Irish Government Bonds 2020. Available at: https://www.ise.ie/Market-
Data-Announcements/Irish-Government-Bonds/Government-Bonds/ (Accessed: 14 April 2020).
IRLANDEO-TREASURY BONDS 2015(45) Bond | Markets
Insider, markets.businessinsider.com. Available at:
https://markets.businessinsider.com/bonds/irlandeo-treasury_bonds_201545-bond-2045-
ie00bv8c9186 (Accessed: 14 April 2020).
IRLANDEO-TREASURY BONDS 2019(50) Bond | Markets
Insider, markets.businessinsider.com. Available at:
https://markets.businessinsider.com/bonds/irlandeo-treasury_bonds_201950-bond-2050-
ie00bh3sqb22 (Accessed: 14 April 2020).
Long-Term Government Bond Yields: 10-year: Main (Including Benchmark) for Ireland 2020.
Available at: https://fred.stlouisfed.org/series/IRLTLT01IEM156N (Accessed: 14 April 2020).
Social bonds and Covid-19 - The next phase :: Environmental Finance 2020. Available at:
https://www.environmental-finance.com/content/analysis/social-bonds-and-covid-19-the-next-
phase.html (Accessed: 14 April 2020).
UNICREDIT BANK IRELAND PLCEO-MEDIUM-TERM NOTES 2016(23) Bond | Markets
Insider, markets.businessinsider.com. Available at:
https://markets.businessinsider.com/bonds/unicredit_bank_ireland_plceo-medium-
term_notes_201623-bond-2023-de000a184kh6 (Accessed: 14 April 2020).
Ireland Stock Market (ISEQ) | 1989-2020 Data | 2021-2022 Forecast | Quote | Chart 2020.
Available at: https://tradingeconomics.com/ireland/stock-market (Accessed: 14 April 2020).
Irish Stock Exchange - Irish Government Bonds 2020. Available at: https://www.ise.ie/Market-
Data-Announcements/Irish-Government-Bonds/Government-Bonds/ (Accessed: 14 April 2020).
IRLANDEO-TREASURY BONDS 2015(45) Bond | Markets
Insider, markets.businessinsider.com. Available at:
https://markets.businessinsider.com/bonds/irlandeo-treasury_bonds_201545-bond-2045-
ie00bv8c9186 (Accessed: 14 April 2020).
IRLANDEO-TREASURY BONDS 2019(50) Bond | Markets
Insider, markets.businessinsider.com. Available at:
https://markets.businessinsider.com/bonds/irlandeo-treasury_bonds_201950-bond-2050-
ie00bh3sqb22 (Accessed: 14 April 2020).
Long-Term Government Bond Yields: 10-year: Main (Including Benchmark) for Ireland 2020.
Available at: https://fred.stlouisfed.org/series/IRLTLT01IEM156N (Accessed: 14 April 2020).
Social bonds and Covid-19 - The next phase :: Environmental Finance 2020. Available at:
https://www.environmental-finance.com/content/analysis/social-bonds-and-covid-19-the-next-
phase.html (Accessed: 14 April 2020).
UNICREDIT BANK IRELAND PLCEO-MEDIUM-TERM NOTES 2016(23) Bond | Markets
Insider, markets.businessinsider.com. Available at:
https://markets.businessinsider.com/bonds/unicredit_bank_ireland_plceo-medium-
term_notes_201623-bond-2023-de000a184kh6 (Accessed: 14 April 2020).
14INVESTMENT ANALYSIS PROJECT
Appendix
Portfolio Analysis
Particulars Price Yield Total Investment Weight %
Bonds 0.70% € 700,000 70%
Government Bonds
IRLAND 2045 Bond 128.1 0.67% € 233,333 33%
IRLAND 19/50 Bond 115.1 0.90% € 233,333 33%
Corporate Bonds
UNICR.BK IR. 16/23 MTN 98.39 0.54% € 233,333.33 33%
Equity 6.50% € 150,000 15%
Cash € 150,000 15%
Risk Free Rate 1.40% € 150,000 15%
Return 1.68% 100%
Appendix
Portfolio Analysis
Particulars Price Yield Total Investment Weight %
Bonds 0.70% € 700,000 70%
Government Bonds
IRLAND 2045 Bond 128.1 0.67% € 233,333 33%
IRLAND 19/50 Bond 115.1 0.90% € 233,333 33%
Corporate Bonds
UNICR.BK IR. 16/23 MTN 98.39 0.54% € 233,333.33 33%
Equity 6.50% € 150,000 15%
Cash € 150,000 15%
Risk Free Rate 1.40% € 150,000 15%
Return 1.68% 100%
1 out of 15
Related Documents
Your All-in-One AI-Powered Toolkit for Academic Success.
+13062052269
info@desklib.com
Available 24*7 on WhatsApp / Email
![[object Object]](/_next/static/media/star-bottom.7253800d.svg)
Unlock your academic potential
© 2024 | Zucol Services PVT LTD | All rights reserved.