A guide to a case study that explores the worth of an investment portfolio using current market value, Estimated current yield, weighted average factor, and weighted average yield. Contains concrete recommendations and sufficient references.
The case study is focused on determining the worth of an investment portfolio of a good friend.
Several quantitative analyses have to be done to make a final recommendation. The analysis will
include finding the current market value of each security position of the portfolio, computing the
individual yields based on current market pricing, and finally determining the weighted average
factor and weighted average yields.
All the analysis is to make a recommendation that is based on correct values. Hence, we first
need to define each item, calculate its value and understand its implication. Subsequently, we can
see the full picture and make a final recommendation.
Current Market Value
The current market value (CMV) for any financial instrument is the closest current resale value
(Kention, 2021). Investors use this to know the value of any object at the current date when
entering into a transaction. It's a concept closely related to the liquidity of an asset. If an asset has
high liquidity the owner can see the asset at a price close to the current market value.
To find CMV we need to know the current market price of the stock. The current market price of
a stock is the most recent selling price of a stock (Kention, 2021). It is one of the most trusted
indicators of that bond's current value. For a stock, CMV can be calculated by multiplying the
current market price of the stock by the total number of shares held in that particular stock
(Bragg, 2021).
Current market value = No. of shares x Current Market Price
Estimated current yield
The estimated current yield is the return on investment that an investor expects to get by
acquiring the security now and holding it for a predetermined period (Bragg, 2021). It is
dependent on the current market price of the bond. It can be calculated by dividing the annual
interest earned by the current market price of the bond (Adkins, 2019). Based on the data given
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MasterAddis. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.99. You're not tied to anything after your purchase.
