WHITE CELLS ARE ADJUSTABLE

Kristoffer Burnett - Certified Management Accountant, 2009-2011

Managing Investments Worksheet

RISK AND RETURN Common Stock Preferred Stock Mid Cap Stock Fund Corporate Bond Fund Municipal Bond Fund Treasury Bond Fund Expected Return 5.3% 6.7% 0.8% 6.9% 7.0% 10.3% Standard Deviation 10.5% 11.4% 11.3% 1.0% 2.6% 3.5%

CORRELATION COEFFICIENT Common Stock Preferred Stock Mid Cap Stock Fund Corporate Bond Fund Municipal Bond Fund Treasury Bond Fund Investment timeline (in years) Risk free rate Weighted-average expected rate of return Weighted-average required rate of return Current value of portfolio Future value of portfolio
2

Common Stock 0.66 0.77 0.58 0.32 0.43 5 3.75% 5.80% 4.33% 26,894.85 35,822.17

Preferred Stock 0.66 0.68 0.77 0.65 0.74

Mid Cap Stock Fund 0.77 0.68 0.24 0.04 0.10

Corporate Bond Fund 0.58 0.77 0.24 0.92 0.98

Municipal Bond Fund 0.32 0.65 0.04 0.92 0.94

Treasury Bond Fund 0.43 0.74 0.10 0.98 0.94

$ $

This is the basis for the Future value of portfolio This figure is somewhat subjective. The rate on a 10 year treasury note is used as a default The expected return for the whole portfolio The required rate of return based on the perceived riskiness of the whole portfolio The sum of the Total value for all investments This is the expected future value of the portfolio based on the Expected return and the Investment timeline

12.0%

Investment Risk/Return Distribution

3.5%, 10.3%

10.0%

8.0%
1.0%, 6.9% 11.4%, 6.7%

2.6%, 7.0%

RETURN

6.0%
10.5%, 5.3%

4.0%

2.0%
11.3%, 0.8%

0.0% 0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

RISK

Notes: 1 The correlation coefficient measures the degree to which two different investments move together. For instance, a correlation coefficient of 1.0 would mean that they tend to move in sync. Conversely, a correlation coefficient of -1.0 would mean that they tend to move inversely. 2 The default chart shows that the expected return for this portfolio decreases as the risk increases. This is counter-intuitive. Under the circumstances, more appropriate investments should probably be sought out.

WHITE CELLS ARE ADJUSTABLE

Managing Investments Worksheet

INPUT Name Current price Quantity held Total value Time period Last year 2 years ago 3 years ago 4 years ago 5 years ago 6 years ago 7 years ago 8 years ago 9 years ago 10 years ago $ Common Stock 57.56 Per unit 75 $ 4,317.00
1 2 3 4

Kristoffer Burnett - Certified Management Accountant, 2009-2011 Small business solutions at http://www.imperoco.com

Return 19.3% -1.5% -0.7% 22.1% 5.4% -1.0% 6.5% -12.8% 6.3% -8.9%

Probability Product Variance 15.0% 2.9% 0.00293 13.9% -0.2% 0.00064 12.8% -0.1% 0.00046 11.7% 2.6% 0.00328 10.6% 0.6% 9.4% -0.1% 0.00037 8.3% 0.5% 0.00001 7.2% -0.9% 0.00237 6.1% 0.4% 0.00001 5.0% -0.4% 0.00101

OUTPUT Expected return Required rate of return Standard deviation Coefficient of variation Beta Future value 5.3% 4.2% 10.5% 1.98 0.30 $ 5,588.87 This is the expected return of the investment based on the input above This is the required rate of return based on the perceived riskiness of the investment The standard deviation attempts to quantify the risk of a particular investment by measuring its volatility Standard deviation / Expected return. This measures the risk per unit of expected return Beta measures the degree to which an investment mirrors a particular index. In this example it is the S&P 500. Beta is also used to calculate the Required rate of return This is the expected future value of the investment based on the Expected return and the Investment timeline

Notes: 1 2 3 4 These are historical returns. This rate should be adjusted to reflect tax benefits, if any. The probability is very subjective. It should reflect the likelihood of a particular return being realized. Return * Probability. These amounts are totaled to calculate the Expected return. Variance is calculated to determine the Standard deviation, or, risk of the investment.

WHITE CELLS ARE ADJUSTABLE

Managing Investments Worksheet

INPUT Name Current price Quantity held Total value Time period Last year 2 years ago 3 years ago 4 years ago 5 years ago 6 years ago 7 years ago 8 years ago 9 years ago 10 years ago $ Preferred Stock 26.19 Per unit 225 $ 5,892.75
1 2 3 4

Kristoffer Burnett - Certified Management Accountant, 2009-2011 Small business solutions at http://www.imperoco.com

Return 26.5% -0.2% 2.2%

Probability Product Variance 25.0% 6.6% 0.00978 65.0% -0.1% 0.00309 10.0% 0.2% 0.00020 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -

OUTPUT Expected return Required rate of return Standard deviation Coefficient of variation Beta Future value 6.7% 6.9% 11.4% 1.70 1.07 $ 8,149.67 This is the expected return of the investment based on the input above This is the required rate of return based on the perceived riskiness of the investment The standard deviation attempts to quantify the risk of a particular investment by measuring its volatility Standard deviation / Expected return. This measures the risk per unit of expected return Beta measures the degree to which an investment mirrors a particular index. In this example it is the S&P 500. Beta is also used to calculate the Required rate of return This is the expected future value of the investment based on the Expected return and the Investment timeline

Notes: 1 2 3 4 These are historical returns. This rate should be adjusted to reflect tax benefits, if any. The probability is very subjective. It should reflect the likelihood of a particular return being realized. Return * Probability. These amounts are totaled to calculate the Expected return. Variance is calculated to determine the Standard deviation, or, risk of the investment.

WHITE CELLS ARE ADJUSTABLE

Managing Investments Worksheet

INPUT Name Current price Quantity held Total value Time period Last year 2 years ago 3 years ago 4 years ago 5 years ago 6 years ago 7 years ago 8 years ago 9 years ago 10 years ago OUTPUT Expected return Required rate of return Standard deviation Coefficient of variation Beta Future value 0.8% 1.5% 11.3% 14.13 0.77 $ 4,481.54 $ Mid Cap Stock Fund 28.71 Per unit 150 $ 4,306.50
1 2 3 4

Kristoffer Burnett - Certified Management Accountant, 2009-2011 Small business solutions at http://www.imperoco.com

Return 12.1% -10.8% -12.2% 12.1% 4.8%

Probability Product Variance 30.0% 3.6% 0.00384 25.0% -2.7% 0.00335 20.0% -2.4% 0.00340 15.0% 1.8% 0.00192 10.0% 0.5% 0.00016 0.0% 0.0% 0.0% 0.0% 0.0% -

This is the expected return of the investment based on the input above This is the required rate of return based on the perceived riskiness of the investment The standard deviation attempts to quantify the risk of a particular investment by measuring its volatility Standard deviation / Expected return. This measures the risk per unit of expected return Beta measures the degree to which an investment mirrors a particular index. In this example it is the S&P 500. Beta is also used to calculate the Required rate of return This is the expected future value of the investment based on the Expected return and the Investment timeline

Notes: 1 2 3 4 These are historical returns. This rate should be adjusted to reflect tax benefits, if any. The probability is very subjective. It should reflect the likelihood of a particular return being realized. Return * Probability. These amounts are totaled to calculate the Expected return. Variance is calculated to determine the Standard deviation, or, risk of the investment.

WHITE CELLS ARE ADJUSTABLE

Managing Investments Worksheet

INPUT Name Current price Quantity held Total value Time period Last year 2 years ago 3 years ago 4 years ago 5 years ago 6 years ago 7 years ago 8 years ago 9 years ago 10 years ago OUTPUT Expected return Required rate of return Standard deviation Coefficient of variation Beta Future value 6.9% 4.0% 1.0% 0.14 0.08 $ 7,685.73 $ Corporate Bond Fund 110.11 Per unit 50 $ 5,505.50
1 2 3 4

Kristoffer Burnett - Certified Management Accountant, 2009-2011 Small business solutions at http://www.imperoco.com

Return 7.4% 6.2% 5.5% 8.9%

Probability Product Variance 40.0% 3.0% 0.00001 30.0% 1.9% 0.00001 20.0% 1.1% 0.00004 10.0% 0.9% 0.00004 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -

This is the expected return of the investment based on the input above This is the required rate of return based on the perceived riskiness of the investment The standard deviation attempts to quantify the risk of a particular investment by measuring its volatility Standard deviation / Expected return. This measures the risk per unit of expected return Beta measures the degree to which an investment mirrors a particular index. In this example it is the S&P 500. Beta is also used to calculate the Required rate of return This is the expected future value of the investment based on the Expected return and the Investment timeline

Notes: 1 These are historical returns. This rate should be adjusted to reflect tax benefits, if any. 2 The probability is very subjective. It should reflect the likelihood of a particular return being realized. 3 Return * Probability. These amounts are totaled to calculate the Expected return.

WHITE CELLS ARE ADJUSTABLE

Managing Investments Worksheet

INPUT Name Current price Quantity held Total value Time period Last year 2 years ago 3 years ago 4 years ago 5 years ago 6 years ago 7 years ago 8 years ago 9 years ago 10 years ago OUTPUT Expected return Required rate of return Standard deviation Coefficient of variation Beta Future value 7.0% 4.4% 2.6% 0.37 0.21 $ 7,954.15 $ Municipal Bond Fund 23.63 Per unit 240 $ 5,671.20
1 2 3 4

Kristoffer Burnett - Certified Management Accountant, 2009-2011 Small business solutions at http://www.imperoco.com

Return 10.5% 6.4% 3.2%

Probability Product Variance 30.0% 3.2% 0.00037 50.0% 3.2% 0.00002 20.0% 0.6% 0.00029 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -

This is the expected return of the investment based on the input above This is the required rate of return based on the perceived riskiness of the investment The standard deviation attempts to quantify the risk of a particular investment by measuring its volatility Standard deviation / Expected return. This measures the risk per unit of expected return Beta measures the degree to which an investment mirrors a particular index. In this example it is the S&P 500. Beta is also used to calculate the Required rate of return This is the expected future value of the investment based on the Expected return and the Investment timeline

Notes: 1 2 3 4 These are historical returns. This rate should be adjusted to reflect tax benefits, if any. The probability is very subjective. It should reflect the likelihood of a particular return being realized. Return * Probability. These amounts are totaled to calculate the Expected return. Variance is calculated to determine the Standard deviation, or, risk of the investment.

WHITE CELLS ARE ADJUSTABLE

Managing Investments Worksheet

INPUT Name Current price Quantity held Total value Time period Last year 2 years ago 3 years ago 4 years ago 5 years ago 6 years ago 7 years ago 8 years ago 9 years ago 10 years ago OUTPUT Expected return Required rate of return Standard deviation Coefficient of variation Beta Future value 10.3% 3.6% 3.5% 0.34 (0.02) $ 1,962.21 $ Treasury Bond Fund 120.19 Per unit 10 $ 1,201.90
1 2 3 4

Kristoffer Burnett - Certified Management Accountant, 2009-2011 Small business solutions at http://www.imperoco.com

Return 15.1% 7.7% 11.0% 4.9%

Probability Product Variance 30.0% 4.5% 0.00069 40.0% 3.1% 0.00027 20.0% 2.2% 0.00001 10.0% 0.5% 0.00029 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -

This is the expected return of the investment based on the input above This is the required rate of return based on the perceived riskiness of the investment The standard deviation attempts to quantify the risk of a particular investment by measuring its volatility Standard deviation / Expected return. This measures the risk per unit of expected return Beta measures the degree to which an investment mirrors a particular index. In this example it is the S&P 500. Beta is also used to calculate the Required rate of return This is the expected future value of the investment based on the Expected return and the Investment timeline

Notes: 1 2 3 4 These are historical returns. This rate should be adjusted to reflect tax benefits, if any. The probability is very subjective. It should reflect the likelihood of a particular return being realized. Return * Probability. These amounts are totaled to calculate the Expected return. Variance is calculated to determine the Standard deviation, or, risk of the investment.