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... Describe the problems faced by Paul Guthrie.
Paul Guthrie, a small time investor has a problem. ... The first problem that Paul is facing is the limited knowledge he has of the financial markets and various instruments that the financial markets have to offer. Paul wants to place the fund in an investment, which has a more attractive yield but also was concerned about the safety of his investment. He wanted such an investment that could be a cushion in case of unexpected events, which might affect his family or business and wanted access to the fund in a reasonable period of time meaning wanted liquidity on his investment.
Paul is faced with three financial instruments, Treasury Notes or T-Notes offered by the US government, Floating Rate Notes or FRNˇ¦s by Citicorp Holdings and money market instruments (Certificates of Deposit or CDˇ¦s, Commercial paper etc. ... In the case of Paul Guthrie, the note is issued for 33 months carrying a coupon rate of 9 percent. Paul is worried about the interest rate fluctuations and inflation fluctuation, which will directly affect the return on the notes. ... On this instrument, Paul is still having second thoughts because he has been unable to understand why Citicorp is issuing the notes and on what fronts would be the funds utilized and the ˇ§distinction between Citicorp and Citibank eluded himˇ¨ and if he invests in this, these are not protected by FDIC insurance. ... What are the criteria to be established for the choice of investment?
There is clearly a very wide range of investment criteria and some of those are mentioned in the general synopsis for report. ... It is also affected by factors such as the rate of growth of the sector of the economy in which the firm is operating, the firmˇ¦s share of the market, the aggressiveness of the competition it faces and most important, the competence of the firms management and workforce. ... At one end of the spectrum one has a very clear and certain cash flow attached to them and at the other end of the spectrum you have a very speculative investment. ... Evaluate the pros and cons of the options before Paul Guthrie? ... Guthrie is faced with three options. ... This feature makes it a very safe form of investment. ...
„« FRNˇ¦s make attractive investment for investors with a strong need to preserve the principal value of the investment should they need to liquidate the investment prior to the maturity of the issue. ... Compare the two investments of Citicorp and Dreyfus from the point of view of the investor such as Paul Guthrie? ... In addition to commercial banking and trust services, Citicorpˇ¦s subsidiaries are engages in mortgage banking, consumer finance, credit card services, management consulting, equipment leasing, factoring, realty appraisal and advisory services, payments mechanisms research, travel services and the sale of travelers checks. ... This will to some extent allow the investor to think twice about their investment. ... This will make investors like Paul Guthrie hesitant in investing in such notes. ... This gives the advantage to the investors because once these are listed; these can be easily sold in the secondary market thus creating liquidity to small investors like Paul Guthrie. ... These money markets instruments new to investors like Paul Guthrie. ... With Dreyfusˇ¦s financial health, it has been assumed that it has a good asset management policy. The net income from investment has been passed on as dividends to stockholders at . ... Although it has incurred net realized and unrealized loss on investment, it can still be considered a worthy investment due to its expertise in market instruments. ... Which investment do you think is less risky? ... Which investment would you recommend to Paul Guthrie based on his requirements and propensities? ... Guthrieˇ¦s requirements before going further into recommendation of the financial instrument. ... Guthrie is very much concerned about the safety of his investment. ... Guthrie. ... Since the fund is invested in different instruments by Dreyfus liquid assets, this diversification allows the portfolio to cushion the investment against any unexpected events. Although it has incurred net realized and unrealized loss on investment, it can still be considered a worthy investment due to its expertise in market instruments. ... , Financial Management, Ninth Edition, Harcourt Asia Pte.
Approximate Word count = 3723
Approximate Pages = 14.9
(250 words per page double spaced)
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