Running head: PORTFOLIO SELECTION 1
Portfolio Selection
FIN/402
You are tasked with creating an investment portfolio that includes a diversified selection of
securities from three categories: interest-bearing securities, equities, and derivatives. In your
portfolio, you have selected securities from companies such as General Electric, Apple, Inc.,
Citigroup, Microsoft, and Disney, as well as bonds from General Electric. Discuss the selection
process for these securities, including an analysis of their financial reports, risk factors, and
growth potential. Additionally, provide recommendations for balancing risk and return in your
portfolio. Your response should be at least 1,500 words in length.

PORTFOLIO SELECTION 2
Portfolio Selection
It is needed to create an investment portfolio so that selection securities are
provided and then an array provision is made so that a diversified portfolio is rendered and the
securities are selected. There are three divisions of which categories of securities can be selected
and from which these categories can be chosen. Interest-bearing securities, equities, and
derivatives make up the classes of the asset to turn the investment through the matching of the
portfolio. The Home Depot, Apple, Inc., Citigroup, and Microsoft are equities and a bond such
as General Electric is an interest-bearing security, however Disney is a stock equity. Choosing
and also researching on the interest bearing securities and five equities is the first step that is to
be kept in mind. Examination of the organization’s investment reports and also analyzes the
Federal Reserve data, and general economic data.
General Electric
Established in 1892, General Electric Company (GE) becomes the technological and
financial sales corporation. There are four segments in the corporation structure: GE Capital, GE
Technology Infrastructure, GE Energy Infrastructure, and NBC Universal. The services of the
GE products ranges from aircrafts, engines, power generation, water processing, household and
medical application ,business and consumer financial services for the industrial products
(Company Information). As the consumption was done by bad debt due to the midst financial
crisis in2008 the 2010 corporation made an annual report quarterly mended so as to make
positive changes with continuous improvements.
A sale of $2 billion was announced by, with global subordinated 10-year bond. There is a
higher rate of risk for the investors and the return tends to compensate for the same. According to

PORTFOLIO SELECTION 3
Nilsen (2011) the bond expected to “carry a risk premium of 1.625 percentage points over
Treasuries, directly in line with preliminary price guidance. GE Capital’s most recently sold 10-
year senior debt issue is quoted at 1.23 percentage points over Treasuries” (para. 6). An issue
plan between $25 billion and $30 billion was also announced in the new debt in 2011 by GE. In
addition, according to Harris and Catts (2011), “GE Capital sold $12.8 billion of dollar-
denominated bonds in 2010, making it the leader in corporate bond sales without government
guarantees” (para. 10).
There was an increase in the quarterly earnings of GE by 21percent to $3.76 billion; up
from $3.11 billion in its 2010 second quarter earnings (The New York Times, 2011). GE has
reported a steady operating earnings of $3.4 billion ,$35.4 billion in total revenue, as well as GE
Capital earnings of $1.5 billion with pre-tax earnings of $1.6 billion for the third quarterly year
(General Electric, 2011). The losses of the organization remains intact in the real estate however
it suffered an entrant loss of $335 million in the second quarter of 2011. The loss turned into an
improvement in its $524 million loss in the second quarter of 2010.
Recent federal reports have enabled GE to earn recognition with the indication that the
Fed lent to a corporation of $16.1 billion during the commercial papers in 2008. There were 2
percent of total purchases during the course and a total aim at the frozen credit was to the market
because of economic and financial credit, to make the repayment of the loan in 2009 February.
None of the debt had purchased the course of the debt and the default earnings for the entire plan
was around $6.1 billion in interest income fees (Layne & Condon, 2011). Also, in 2008 GE was
given a permission to hold a special permission to make an issue of $59.3 billion in debt under
with the federal deposits Insurance Corporation’s Temporary Liquidity Guarantee Program. The
capital has always been entitled to the increase in profits and the company focuses on industrial

FIN/402: Portfolio Selection

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