BBA 325 Portfolio Management Final Assignment: INVESTMENT Simulation
individual
you have to submit: 12 slides presentation (.pdf or .ppt), and written report of 1000-1500 words (.pdf)
60% of the final grade
Investment competition instructions:
The closing date of the simulation: Monday of week 8.
Recommended structure of the presentation:
Slide 1: Show which stocks you chose for your portfolio. Report the weights of the stocks, prices at the beginning and at the end of the competition. Do not choose more than 4 stocks.
Slide 2: Report the overall realized return on your investment portfolio.
Realized return of portfolio=w1*R1+w2*R2+w3*R3+w4*R4
wi=weight of stock ‘’i’’ in your portfolio
Ri=realized return of asset ‘’i’’= (Price @ end – Price @ beginning)/Price @ beginning
OR
more formally:
R=(P[t+1]-P[t])/P[t]
Slide 3: How did you choose the stocks to your portfolio: fundamental analysis, technical analysis, recommendations of analysts, news analysis, etc.
Slide 4: Report the variance-covariance matrix
Option 1: Take estimates from the other web pages
You can take estimates of volatilities of individual stocks from Reuters, Bloomberg, Yahoo finance or other sources. If you are not quite sure how to estimate covariances between stocks:
You can take estimates of Reuters, Bloomberg or other credible web page.
Option 2: Compute by yourself using historical data
How to estimate variance-covariance matrix from historical data:
Option 3: Less preferable
You can assume that all the covariances are zeroes. It is an option only if you are unable to do one of the two methods above.
Slide 5: Compute the volatility of your portfolio
Hint: it is easy to compute in matrix form in excel. MMULT command.
Sigma2_p= w_T* Variance-covariance matrix*w
Slide 6: Compute Sharpe ratio, assuming risk-free rate of 2%. Interpret Sharpe ratio.
Slide 7: Do you have any abnormal (more than 10% per period) changes in price of the stocks from your portfolio? Could you interpret why the stock goes up/down? What were the most probable drivers?
Slide 8: If you would be able to go back in time and change the structure of your portfolio would you choose some other stocks?
Slide 9-11: Any significant information you would like to talk about.
Slide 12: Conclusions and lessons learned
Formalities:
Wordcount: not more than 1500 words for the written report. Report should discuss the same topics as presentation but in a greater detail.
Cover, Table of Contents, References and Appendix are excluded of the total wordcount.
Font: Arial 12,5 pts.
Text alignment: Justified.
The in-text References and the Bibliography have to be in Harvard’s citation style.
Submission: Sunday, 11th of September, week 7, time 23.59.
Weight: This task is a 60% of your total grade for this subject.
It assesses the following learning outcomes:
Understand and utilize the principles of risk and return and diversification in the analysis of investments and portfolios
Appreciate and include the effects of the external environment (political, economic and cultural for both the domestic and global map)
Identify, analyze, evaluate and select investment choices from among the various types of investments including stocks, bonds, commodities and derivatives
Construct artificial and actual portfolios using strategies that reflect investment goals and financial conditions
Rubrics:
Exceptional 90-100 Good 80-89 Fair 70-79 Marginal fail 60-69
Knowledge & Understanding (20%) Student demonstrates excellent understanding of key concepts and uses vocabulary in an entirely appropriate manner. Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant vocabulary. Student understands the task and provides minimum theory and/or some use of vocabulary. Student understands the task and attempts to answer the question but does not mention key concepts or uses minimum amount of relevant vocabulary.
Application (30%) Student applies fully relevant knowledge from the topics delivered in class. Student applies mostly relevant knowledge from the topics delivered in class. Student applies some relevant knowledge from the topics delivered in class. Misunderstanding may be evident. Student applies little relevant knowledge from the topics delivered in class. Misunderstands are evident.
Critical Thinking (30%) Student critically assesses in excellent ways, drawing outstanding conclusions from relevant authors. Student critically assesses in good ways, drawing conclusions from relevant authors and references. Student provides some insights but stays on the surface of the topic. References may not be relevant. Student makes little or none critical thinking insights, does not quote appropriate authors, and does not provide valid sources.
Communication (20%) Student communicates their ideas extremely clearly and concisely, respecting word count, grammar and spellcheck Student communicates their ideas clearly and concisely, respecting word count, grammar and spellcheck Student communicates their ideas with some clarity and concision. It may be slightly over or under the wordcount limit. Some misspelling errors may be evident. Student communicates their ideas in a somewhat unclear and unconcise way. Does not reach or does exceed wordcount excessively and misspelling errors are evident.