Describe, and defend your selections of Capital Markets Securities investment categories that would be suitable given the policy parameters and constraints of your directives.

As the newly-hired pension fund management team for the Stillwell County Teachers Association, you are responsible for managing the $100 Million portfolio on behalf of the association. The monies are currently 100% invested in cash and cash equivalents. Your mandate is to first determine an appropriate asset allocation percentage between fixed income, stocks, and cash, in accordance with a moderately conservative risk-tolerance investment policy.

Next, select, describe, and defend your selections of Capital Markets Securities investment categories that would be suitable given the policy parameters and constraints of your directives. With regard to your securities selections:

  • Consider types of securities, maturities,
  • Credit ratings if appropriate, and other important criteria.
  • You have also been instructed to add an international component to aid in diversification efforts.

Deliverables:

  • Create an Excel document with accompanying pie chart(s) that display your securities selections and asset allocation categories, and sub-categories.
  • Develop a written narrative report using APA Editorial Style on a Word document that fully explains your securities selections, and the financial logic of your decisions.
  • Estimate an appropriate approximate current yield for the portfolio, and an assumed rate of return percentage. Use the time value of money principles and financial functions of Excel to show:
    • The future value of the portfolio at the end of year five assuming a 4% growth rate each year.
    • The present value of the portfolio if the initial $100M was discounted by 3.5%.
    • The future value of the current yield at the end of year one if inflation is 3% annually per year.

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