Portfolio Simulation Project

(FIN5PMT Semester 1, 2021)

Part One (Portfolio Management)

The assignment should be completed by a group consisting of two to three students. Please send the list of group members with your names and student IDs to Dr Jing Zhao (Email:

j.zhao@latrobe.edu.au) by email by 23 March 2021, and a Group Name will be assigned then. 

 

Part One (Portfolio Management)

Each group is required to manage a $100,000 portfolio (described below) through Virtual Stock Exchange Games of MarketWatch.  Trading begins on Monday, 29 Mar 2021 (U.S. time) and ends on Friday, 7 May 2021 (a 6-week trading period).  The assessment of this part of the assignment is based on the performance of the portfolio under management, which contributes 8% of the final assessment.

• Trading Account: The portfolio needs to be an active trading account.  The goal of portfolio management is to accumulate more wealth.  Each group has to conduct at least 10 transactions but no more than 100 transactions over the 6-week trading period. 

Failure to meet these trading requirements will result in a 2-point penalty on the project. • Base Point Allocation

Portfolio value as of close on 7 May 2021	Base Point
$120,001 or more	6
$110,001 − $120,000	5.5
$100,001 − $110,000	5
$90,001 − $100,000	4.5
$80,001 − $90,000	4
$70,001 − $80,000	3.5
$60,001 − $70,000	3
$50,001 − $60,000	2.5
$50,000 or less	0

• Bonus Points (as of close on 7 May 2021) o The highest portfolio value among all groups: 2 points o The second or third highest portfolio value: 1 point o Higher portfolio value than the benchmark: 1 point Benchmark: SPDR S&P 500 ETF Trust (SPY) 

https://www.spdrs.com.au/etf/fund/spdr-sp-500-etf-trust-SPY.html

 

• Total performance mark is determined by Min(Base Points + Bonus Points, 8). For example, Group X achieves a final portfolio value of $111,000, which positions it the fourth in the class, while the investment of $100,000 in the benchmark results in a final value of $100,300.  The total performance mark is Min(5.5 + 0 + 1, 8) = 6.5.

 

Part Two (Performance Report)

• Trader’s Log – Each group needs to keep a log documenting his/her trading activities.  More specifically, the log should include a brief analysis of weekly trading activities of your portfolio (what transactions did you make, what was the reasoning behind each transaction, what happened during the week that affected your portfolio value, etc.).  In addition, the value of each portfolio at the end of each trading day should be recorded along with the value of the DJIA, the S&P 500, and the NASDAQ Composite.  It should be prepared and submitted in an Excel file.
• Summary Analysis – Each group needs to prepare a summary report on your portfolio simulation experience.  You also need to discuss your trading strategies and their results.  Highlight your best and worst transactions and discuss each in depth. (Note that this may or may not be your biggest gain and biggest loss.)  Also, you should compare your results with each of the three indices using various performance indicators discussed in the class (e.g., Sharpe Measure, Treynor Measure, and Jensen’s Alpha).  It should be prepared in a Word file with about 1000 words of main text. 
• The deadline of submitting Trader’s Log and Summary Analysis is 25 May 2021 and they are worth 20% of the final assessment.

 

Part Three (Presentation of Report)

• Each group needs to give a 5-minute presentation on his/her performance report on 25 May 2021, which is worth 2% of the final assessment. 

 

Miscellaneous Comments

Every component of this project is expected to be done in a professional manner and will be graded under those expectations.  This means that grammar, spelling, and overall presentation will have an influence on the score. 

 

Reporting on Graduate Capabilities

Mark of Part One (Portfolio Management) and Part Two (Performance Report) will report on graduate capabilities of creative problem-solving and inquiry/research, while mark of Part Three (Presentation of Report) will report on graduate capabilities of speaking.  

 

The submission of your assignment:

• Submission of electronic files of the Report in Word file and the Trader’s Log in Excel file through the submission links in the “Assessment” Section on the LMS by 11:59PM, 25 May 2021 (Melbourne time). Only one member of each group needs to make the submission. If there exist multiple submissions from each group, only the first submitted file will be graded.  

             

Use the information below to participate in Virtual Stock Exchange Games of MarketWatch.

• Create Your Account

1. Go to the game webpage on Virtual Stock Exchange:

https://www.marketwatch.com/game/fin5pmt2021s1

2. Click “JOIN GAME” button as shown in the screenshot below.

 

 

Register for a free account. Please use your assigned Group Name for the purpose of identification. For instance, Group 1 should use “Group 1” as First Name and

“FIN5PMT2021S1” as Last Name as shown in the screenshot below. Each group runs a unique account as a player. Note: Please create a new password particularly for MarketWatch to protect your privacy.