retiree's problem
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Retiree’s ProblemGLOBAL FINANCIAL MARKETSProfessor Yee Seng Cheah, Michael
Davide Vioto MSGF
Davide Vioto - MSGF
OVERALL60% EQUITY - 40% BONDSEQUITY:• Shares of 17 different companies• Dividend history stable or growing• Diversification in terms of sector and industry• 14 Shares with Beta<1 to reduce the impact of market trend• Only 2 shares with Beta>1, yet balanced through the others beta of
shares • 1 Share with Beta<0 to balance the Beta of the Portfolio• Usage of the 5 Year Average Dividend YieldBONDS:• 8 different Bonds:
1 Treasury 30YR 3 Corporate 4 Municipal (1 NY, 2 FL, 1 SD)
• Rating (Fitch) between A to AAA• Not callable Bonds• Use of Current Yield, instead of Coupon, because we are not
considering to buy bonds on issue
Davide Vioto - MSGF
U. S. AND NY TAX RATE• Married filing jointly
• Standard deduction of $12600 used to calculate the taxable
• Municipal bond considered in Portfolio are issued by States with No Income Taxes
U. S. Tax Rate NY Tax Rate
Davide Vioto - MSGF
PORTFOLIO COMPOSITION
Equity
60,00%
Bonds
40,00%
McDonald's Corp. (MCD); 2.00%
Sysco Corporation (SYY); 2.00%
Consolidated Edison, Inc. (ED); 5.88%
Southern Company
(SO); 7.00%Digital Realty
Trust Inc. (DLR); 7.00%
Verizon Com-munications
Inc. (VZ); 2.00%Winthrop Realty Trust
(FUR); 2.00%Lexington Realty Trust (LXP); 2.00%
Franklin Street Properties Corp. (FSP); 2.00%
Redwood Trust, Inc. (RWT); 2.00%
One Liberty Properties Inc. (OLP); 2.00%
Mesabi Trust (MSB); 2.00%
Anworth Mortgage As-set Corpora-tion (ANH);
7.00%
MFA Financial, Inc. (MFA);
4.12%
SeaDrill Limited (SDRL) ; 2.00%
Resource Capi-tal Corp. (RSO);
2.00%ARMOUR Residential REIT, Inc. (ARR); 7.00%
T-BOND (OLD 30YR) 3.125% 15-Aug-2044;
2.00%SG STRUC-
TURED PRODS INC;
8.00%BANK OF AMERICA
CORP; 8.00%
INTL BK RECON DEV MTNS BE; 8.00%
NASSAU CNTY N Y GEN IMPT
BDS; 2.00%
ORLANDO FLA CMNTY REDEV AGY TA TAX INCR
REV BDS; 8.00%
FAU FIN CORP FLA CAP IMPT REV CAP IMPT
REV BDS; 2.00%
PENNINGTON CNTY S D CTFS PARTN COPS;
2.00%
Davide Vioto - MSGF
EQUITYSHARE DIV. YIELD
(5Y)BETA SECTOR INDUSTRY
McDonald’s Corp. (MCD) 3.30% 0.67 Services RestaurantsSysco Corporation (SYY) 3.40% 0.81 Services Food Wholesale
Consolidated Edison, Inc. (ED) 4.30% 0.22 Utilities Electric UtilitiesSouthern Company (SO) 4.50% 0.16 Utilities Electric Utilities
Verizon Communications Inc. (VZ) 4.90% 0.61 Technology Telecom Ser. - Domestic
SeaDrill Limited (SDRL) 13.80% 1.54 Basic Materials Oil&Gas Drilling & Expl.
Winthrop Realty Trust (FUR) 5.80% 0.59 Financial REIT - DiversifiedLexington Realty Trust (LXP) 6.10% 0.63 Financial REIT - DiversifiedResource Capital Corp. (RSO) 15.00% 1.21 Financial REIT - Diversified
Redwood Trust, Inc. (RWT) 6.80% 0.72 Financial REIT - DiversifiedOne Liberty Properties Inc. (OLP) 7.30% 0.77 Financial REIT - DiversifiedAnworth Mortgage Asset Corp.
(ANH)10.90% 0.55 Financial REIT - Diversified
MFA Financial, Inc. (MFA) 11.60% 0.89 Financial REIT - DiversifiedDigital Realty Trust Inc. (DLR) 4.80% -0.52 Financial REIT - Office
Franklin Street Prop. Corp. (FSF) 6.30% 0.57 Financial REIT - OfficeARMOUR Residential REIT, Inc.
(ARR)17.00% 0.79 Financial REIT - Residential
Mesabi Trust (MSB) 10.30% 0.97 Financial Diversified Investments
Source: www.finance.yahoo.com
Davide Vioto - MSGF
BONDSBOND Curren
t YieldTYPE RATING
T-BOND (30YR) 3.125% 08-15-2044 3.00% Treasury AAASG STRUCTURED PRODS INC. 17.84% Corporate A
BANK OF AMERICA CORP. 12.12% Corporate AINTL BK RECON DEV MTNS BE 10.47% Corporate AAA
NASSAU CNTY N Y GEN IMPT BDS 6.15% Municipal NY
A
ORLANDO FLA CMNTY REDEV AGY TA TAX INCR REV BDS
6.63% Municipal FL A
FAU FIN CORP FLA CAP IMPT REV CAP IMPT REV BDS
6.39% Municipal FL A
PENNINGTON CNTY S D CTFS PARTN COPS
6.54% Municipal SD
AA
Source: www.finance.yahoo.com
Davide Vioto - MSGF
PORTFOLIO RESULTS
PORTFOLIO RETURN PORTFOLIO TOTAL RISK (BETA)9.20% 0.3
GROSS PROFIT 92008.964PROFIT AFTER U. S. AND NY
TAXES77115.251
RETURN AFTER TAXES 7.712%
• Availability of $6426.271 per month to cover rent, medical incurance, spending money, etc.
