The High Yield Dilemma Case : You were recently hired by a large company with a 401K plan. They gave you extensive paperwork to fill out including at least thirty different mutual funds to choose from. You worry about the stock market. This year has not been good for stocks. You have decided to invest in fixed income because it is safer. However, you are concerned that returns, while safe, tend to be low in this type of investment. You know that "junk bonds" tend to give a higher return. 

  Cover all the details needed below in the summary: Provide detailed summary of  what percentage of your fixed income retirement investment should be in junk bonds. Be clear on what a junk bond is. Analyze the attractive and unattractive aspects of a junk bond. Don't overlook the probability of default. Remember that a portion of your fixed income portfolio will still be invested in rated (non-junk) bonds. Be specific on the junk bond percentage you recommend and why you feel this is a smart choice. Identify the three actual mutual funds for your retirement funds. Show that they contain junk bonds, have a track record of success with these risky investments and will meet your investment preferences.

Answer rating: 100% (QA)

As a new employee with a 401K plan the choice of mutual funds can be overwhelming However since the ... View the full answer