FINANCIAL MANAGEMENT

PORTFOLIO

Index
Introduction
What is investing? Why invest?

Shares
IBM Exxon Mobil Corp JP Morgan Chase & Co

Bonds
Brazilian Bonds Australian Bonds

Treasury Bill Portfolio Conclusions

Introduction
What is Investing?

Investing is how you make your money grow, or appreciate for long term financial goals. Saving is a plan to set aside a certain amount of your earned income over a short period of time in order to be able to accomplish a short term goal. Investing, on the other hand, is a much longer term activity as an action that is based on long term goals and is primarily accomplished by having your money make more money for you.
Why Invest?

beat inflation, achieve financial goals like buying a car or paying for college, and retirement.

Shares
The stock market is one option for investing your money. Stocks are unmatched in comparison to any other investing tool because they are the leading way to make money and stay ahead of inflation over time. When you invest in stocks that a company offers, you are buying a share of that company. Depending on how well the company does determines how much each share is worth.
Rank Company Country Sales Profits Assets Market Value 1 JPMorga

n Chase

United States

$115.5 B

$17.4 B

$2,117.6 B

$182.2 B

2 HSBC

Holdings

United Kingdom

$103.3 B

$13.3 B

$2,467.9 B

$186.5 B

3 General

Electric

United States

$150.2 B

$11.6 B

$751.2 B

$216.2 B

4 ExxonM

obil

United States

$341.6 B

$30.5 B

$302.5 B

$407.2 B

Royal Dutch Shell

Netherlands $369.1 B

$20.1 B

$317.2 B

$212.9 B

Source: Worlds Biggest Public Companies according to the Forbes list calculated until April 2011 based on sales, profits, assets and market value.

INTERNATIONAL BUSINESS MACHINES CORP (IBM)

Trading Information
Stock Price History Beta: 52-Week Change3: S&P500 52Week Change3: 52-Week High (Jul 22, 2011)3: 52-Week Low (Sep 21, 2010)3: 50-Day Moving Average3: 200-Day Moving Average3: Enterprise Value/EBITDA (ttm)6: Management Effectiveness Return on Assets (ttm): Return on Equity (ttm): Dividends & Splits Forward Annual 0,7 Dividend Rate4: 3 1,70 %

Forward Annual 32,38% Dividend Yield4: Trailing Annual 5,47% Dividend Yield3: Trailing Annual 185,63 Dividend Yield3: 5 Year Average 130,78 Dividend Yield4:

2,8 1,60 %

N/A 22,00 % Sep 9, 2011 Aug 8, 2011 2:01 May 27, 1999

168,77

Payout Ratio4:

168,25 Dividend Date3:

8,78 Ex-Dividend Date4: Last Split Factor (new per old)2:

12,06% Last Split Date3: 69,26%

2008-2009 23/09/2008 23/09/2009 23/09/2010 29/09/2011 108,9627 116,5258 129,4256 174,72 108,9627 116,5258 107% 7% Average Growth

2009-2010 116,5258 129,4256 111% 11% 7%

2010-2011 129,4256 174,72 135% 35%

PRICE DIVIDEND YIELD INFINITY BETA

173,02 3,00 1,70% 1% 0,70

International Business Machines Corp (IBM:US)

Price $

Last Dividend Growth Rate Growth Inf Yield Beta 173,02 3,000 7,00% 0,50% 1,700%

0,7

1 2 3 4 5 5

Do D1 D2 D3 D4 D5 D6 P5

$ $ $ $ $ $ $ $

3,00 3,21 3,43 3,68 3,93 4,21 3,00 250,00 Po

$ 3,16 $ 3,32 $ 3,49 $ 3,68 $ 3,87 $ 229,79 $ 247,31

EXXON MOBIL
Trading Information Stock Price History Dividends & Splits Forward Annual 0,45 Dividend Rate4:

Beta:
52-Week Change3: S&P500 52Week Change3: 52-Week High (Feb 23, 2011)3: 52-Week Low (Sep 23, 2010)3: 50-Day Moving Average3: 200-Day Moving Average3: Management Effectiveness Return on Assets (ttm): Return on Equity (ttm):

1,88
2,60%

Forward Annual 17,12% Dividend Yield4: Trailing Annual 2,86% Dividend Yield3:

1,82

Trailing Annual 88,23 Dividend Yield3:

2,50%

5 Year Average 60,9 Dividend Yield4:

2,00%

72,86 Payout Ratio4:

24,00% Sep 8, 2011 Aug 10, 2011 2:01 Jul 19, 2001

80,03 Dividend

Date3:

Ex-Dividend Date4: Last Split Factor (new 10,13% per old)2: 25,32% Last Split Date3:

2008-2009 23/09/2008 23/09/2009 23/09/2010 29/09/2011 72,2369 65,5699 59,7136 74,01 72,2369 65,5699 91% -9% Average Growth

2009-2010 65,5699 59,7136 91% -9% 10%

2010-2011 59,7136 74,01 124% 24%

PRICE DIVIDEND YIELD INFINITY BETA

71,97 1,88 2,60% 1% 0,45

Exxon Mobil

Price $

Last Dividend Growth Rate Growth Inf Yield Beta 71,97 1,880 10,00% 0,50% 2,600%

0,45

1 2 3 4 5 5

Do D1 D2 D3 D4 D5 D6 P5

$ $ $ $ $ $ $ $

1,88 2,07 2,27 2,50 2,75 3,03 1,88 89,52 Po

$ 2,02 $ 2,16 $ 2,32 $ 2,48 $ 2,66 $ 78,74 $ 90,38

JP Morgan Chase
Trading Information Stock Price History Beta: 52-Week Change3: S&P500 52Week Change3: Dividends & Splits Forward Annual 1,14 Dividend Rate4: Forward Annual -24,04% Dividend Yield4: Trailing Annual 2,86% Dividend Yield3: 1 3,10%

0,6

52-Week High (Feb 16, 2011)3: 52-Week Low (Sep 21, 2011)3:

Trailing Annual 48,36 Dividend Yield3: 5 Year Average 30,26 Dividend Yield4:

1,90%

N/A

50-Day Moving Average3: 200-Day Moving Average3:

35,13 Payout Ratio4:

9,00%

41,15 Dividend Date3:

Jul 30, 2011

Management Effectiveness
Return on Assets (ttm): Return on Equity (ttm):

Ex-Dividend Date4:

Jul 1, 2011

Last Split Factor (new 0,95% per old)2: 11,43% Last Split Date3:

3:02

Jun 12, 2000

2008-2009 23/09/2008 23/09/2009 23/09/2010 29/09/2011 38,8948 44,2179 38,5575 32,25 38,8948 44,2179 114% 14% Average Growth
JPMorgan Chase & Co (JPM:US)

2009-2010 44,2179 38,5575 87% -13% 1%

2010-2011 38,5575 32,25 84% -16%

PRICE DIVIDEND YIELD INFINITY BETA

30,34 1,00 3,10% 0% 1,14

Price $

Last Dividend Growth Rate Growth Inf Yield Beta 30,34 1,000 1,00% 0,5% 3,100%

1,14

1 2 3 4 5 5

Do D1 D2 D3 D4 D5 D6 P5

$ $ $ $ $ $ $ $

1,00 1,01 1,02 1,03 1,04 1,05 1,00 38,46 Po

$ 0,98 $ 0,96 $ 0,94 $ 0,92 $ 0,90 $ 33,02 $ 37,72

Bonds
A bond is an agreement on a loan between the issuer and the person buying the bond (bondholder). The bondholder has lent a certain amount of money to a government agency, municipality, or corporation and is given interest on the loan. Throughout the term of the loan, the issuer also pays interest to the bondholder. The interest amount is set when the bond is issued.

Brazilian Bonds

Australian Bonds

Brazil Bond Australian Bond

MATURITY COUPON% 5 years 10,00% 5 years 4,75%

Price / Yield 93,48% 104,67%

yield call date call price yield to call 11,80% 2 102% 14,94% 3,710% 2 101% 3,89%

AUSTRALIAN BOND

face value Coupon rate

maturity

coupon value B0
YTC yield to maturity
BRAZIL BOND

50.000,00 4,75% 5 years 2.375,00 ($ 52.333,93) 3,89% 3,71%

We accept to sell this Australian's bond Because the YTC is higher than YT

face value Coupon rate

maturity

100.000,00 10% 5 years 10.000,00 ($ 93.479,13) 14,94% 11,80%

coupon value B0
YTC

yield to maturity We accept to sell this Brazil's bond Because the YTC is higher than YTM

Treasury Bill
A negotiable debt obligation issued by the U.S. government and backed by its full faith and credit, having a maturity of one year or less. U.S. Treasury Bills are exempt from state and local taxes. Treasury Bills are considered the safest securities available to the U.S. investor, and so the yield on these securities are considered the risk-free rate of return.

SECURITY
US Treasury Bill

FACE VALUE MATURITY COUPON/ YIELD PRICE call date call price yield to call 50.000,00 5 years 0,85% $ 49.578,58 180 DAYS 99,50% 1,01%

Portfolio
It refers to any collection of financial assets such as stocks, bonds and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions. It is a generally accepted principle that a portfolio is designed according to the investor's risk tolerance, time frame and investment objectives.

BONDS

State of the Economy Boom Normal Recession

Probability of State Ocurring 0,3 0,4 0,3 1,0

Associated Rate of Return AUST BRAZILIAN 5,00 14,00 3,50 11,00 -1,00 5,00

Expected Rate of Return AUSTRALIAN BRAZILIAN 1,50 4,20 1,40 4,40 -0,30 1,50 2,60% 10,10%

AUSTRALIAN (k1 - k) 4,97 3,47 -1,03 (k1 - k) 24,74 12,07 1,05

2

P1 0,30 0,40 0,30

(k1-k)2 P1 7,42 4,83 0,32 4,19 2,05%

Variance Standard Deviation

BRAZILIAN (k1 - k) 13,90 10,90 4,90 (k1 - k) 193,18 118,79 24,00

2

P1 0,30 0,40 0,30

(k1-k)2 P1 57,95 47,52 7,20 37,56 6,13%

Variance Standard Deviation

TREASURY BILL

State of the Economy Boom Normal Recession

Probability of State Ocurring 0,3 0,4 0,3 1,0

TB 1,20 0,85 0,50

Expected Rate of Return TB 0,36 0,34 0,15 0,85%

TB (k1 - k) 1,19 0,84 0,49 (k1 - k) 1,42 0,71 0,24

2

P1 0,30 0,40 0,30

(k1-k)2 P1 0,43 0,28 0,07 0,26 0,51%

Variance Standard Deviation

SHARES Probability of State Ocurring 0,3 0,4 0,3 1,0 Expected Rate of Return EXXON 4,50 4,00 1,50 10,00% IBM (k1 - k) 11,93 6,93 0,93 (k1 - k)
2

State of the Economy Boom Normal Recession

IBM 12,00 7,00 1,00

Associated Rate of Return EXXON 15,00 10,00 5,00

JP MORGAN 3,00 1,00 -3,00

IBM 3,60 2,80 0,30 6,70%

JP MORGAN 0,90 0,40 -0,90 0,40%

P1 0,30 0,40 0,30

(k1-k)2 P1 42,72 19,23 0,26 20,74 4,55%

142,40 48,07 0,87

Variance Standard Deviation

EXXON (k1 - k) 14,90 9,90 4,90 (k1 - k) 222,01 98,01 24,01

2

P1 0,30 0,40 0,30

(k1-k)2 P1 66,60 39,20 7,20 37,67 6,14%

Variance Standard Deviation

JP MORGAN (k1 - k) 3,00 1,00 -3,00 (k1 - k) 8,98 0,99 9,02

2

P1 0,30 0,40 0,30

(k1-k)2 P1 2,69 0,40 2,71 1,93 1,39%

Variance Standard Deviation

INVESTMENT

250.000,00
%

BONDS BRAZILIAN AUSTRALIAN TREASURY BILL SHARES IBM EXXON JP MORGAN 15.000,00 15.000,00 20.000,00 100.000,00 50.000,00

150.000,00 40,00% 20,00% 50.000,00 50.000,00 6,00% 6,00% 8,00% 100,00% 20,00%

EXPECTED RATE OF RETURN OF THE PORTFOLIO PORTFOLIO RISK, STANDARD DEVIATION PORTFOLIO RISK, STANDARD DEVIATION (2)

5,76% 3,72% 0,75%

Conclusion
After elaborating the Portfolio we get that the expected rate of return of our portfolio is 5.76%, which is a very good percentage, and a portfolio risk of 3.72% If we consider that Bonds and the Treasury Bill has risk free, then the standard deviation of the Portfolio goes down to 0.75%. Our portfolio is conservative since 80% of it is invested in less-risky securities as bonds and the Treasury bill, leaving just the 20% for shares.