GET A PROFESSIONAL PAPER DONE BY AN EXPERT
Trading ReportV. Trading Simulation Project Information/GuidelinesA. IntroductionEach student will manage a portfolio of $1000,000 each through student’s trading account withbelow to register: https://www.howtheman online trading platform (howthemarketwork.com).1Currency: United States DollarInitial Cash Balance: 1,000,000.00 Registration Start/End Dates: Jan 18, 2022 Registration Start/End Dates: Jan 31, 2022 Trading Period Start/End Dates: Jan 31, 2022 Trading Period Start/End Dates: Apr 30, 2022 Public or Private Classroom: Private Password: BUS36290SPRING2022 Minimum Stock Price for Buying: 5.00 Minimum Stock Price forShorting: 5.00Allow Buying on Margin: YesAllow Short Selling: YesAllow Day Trading: YesU.S. Stocks/ETFs YesU.S. OTCBB Stocks NoU.S. Mutual Funds YesToronto Stocks YesCommission Cost for Stocks: 10.00 Commission Cost for MutualFunds: 10.00Position Limit for Stocks: 25Position Limit for Mutual Funds: 50You make trade as often as daily as deem appropriate. Students are expected to maintain atrader’s log that documents your trading activities. You need to submit your trader’s logvia a Blackboard Dropbox.The closing date of the simulation project will be on April 30, 2022.2A final report should be turned in after you have completed theproject. The reports should neatly type and cover at least the topics outlined on the attached twopages.Grading for the project WILL NOT depend on your portfolio performance. Grading will dependon the quality of the two required reports and how well the management of your portfolio seemedto meet the objectives outlined in your initial report.B. Report Guidelines1) Initial Report Guidelines (Report#1)The initial report should include the following:1) Portfolio Management Objectivesa) Purpose: Describe your investment objectives: What is the purpose for which youare investing this money and what is your investment horizon? I encourage you to choose rather long investment horizons, if possible?b) Security Composition of Portfolio: Describe your portfolio investment style (asset classes and allocation): What types of securities would best help you achieve your objectives? Do you plan to set certain parameters or the percentages of your investable funds that you are willing to put in various investment vehicles? If so, please specify.c) Trading Activity (turnover): How actively do you intend to trade in the management of this portfolio?d) Risk composition of Portfolio: Discuss major different risk that your portfolio faces. How would you characterize the degree of risk you intend to take your investment portfolio? To what degree do you intend to diversify your portfolio? Do3you intend to concentrate in particular industries? Which ones?2) Security Selection StrategyWhich security selection techniques (fundamental, technical, etc.) will you be using toselect securities for this portfolio? Do you intend to use a security selection technique thatyou have designed? If so, describe it.3) Investment Background and ExperienceWhat background and experience do you have in investing? Specify those security vehicles and markets in which you have experience and expertise.2) Final Report Guidelines (Report#2)The final report should address at least the following:1. Analysis of Final Performance vs. Initial Objectivesa) Purpose: As a result of the experience during the semester, would you alter your initial objectives? Why or why not?b) Security Composition of Portfolio: Have the securities you selected help youto achieve your initial objective? Briefly explain.c) Trading Activity (turnover): How actively did your turn over the securities in the portfolio during the semester? Have your views on trading changed as a result of your experience?2. Assessment of Security Selection Strategy:2.1 Overview of your Trading Strategies:Which of the security selection strategies used in this project have been successful in helping you to meet your objectives? Why were they successful? Which ones were unsuccessful? Why?2.2 Real-world Application:Fundamental analyst for the best performance stock in your portfolio.The goal of this part is to apply the fundamental analysis tools that you have studied in Chapter 6. You will use these tools to analyze a firm’s fundamentals and then come up with a trading strategy.a) First choose a publicly traded company that you would hypothetically want to analyze/track/invest in.b) Using a financial news website such as the following, look up the financial statements of that company. (There are other places to look; it’s your choice.)http://www.msn.com/en-us/money/investing http://finance.yahoo.com/c) Using the Constant Perpetual Dividend Growth Model, the Residual Income4Model, the P/E ratio, the P/CF ratio, and the P/S ratio, perform valuations on or predictions of the firm’s stock price.o For the Constant Dividend Growth Model, find current dividends per share, D(0), from the income statement. Estimate the dividend growth rate, g, or find it on the ratios/statements pages. Estimate the discount rate, k, using the CAPM. (Note: Some stocks don’t pay dividends. If that is the case, then state that and skip the dividend model.)o Residual Income Model: Find or estimate the EPS growth rate. Find book value per share on the balance sheet. Use the discount rate, k, from parta.o P/E ratio: Find or estimate the EPS growth rate. (You can use the same EPS growth rate from part b.) Predict next year’s EPS. Then predict next year’s stock price using the average P/E ratio. (Use the average P/E ofthe last few years.)o P/CF ratio: Find or estimate the CFPS growth rate. Predict next year’s CFPS. (Youcan use Cash from Operations on the Cash Flow Statement to approximate operating cash flow.) Then predict next year’s stock price using the average P/CF ratio. (Use the average P/CF of the last few years.)o P/S ratio: Find or estimate the SPS growth rate. Predict next year’s SPS.Then predict next year’s stock price using the average P/S ratio. (Use theaverage P/S of the last few years.)d) You now have as many as five different estimates for the stock value based on part c. Compare your estimates of stock value to the current actual stock price(on Yahoo Finance or other). Make a prediction about whether the stock is underpriced or overpriced (i.e. whether you should buy it or short it in the future!).C. Final Project Evaluation.Provide a brief discussion of what you learned from this project. How have your ideaschanged during the semester? Do you recommend that this project be continued to future semesters? Did it complement the textbook and class discussion? Did you enjoythe experience?5In addition, you should also provide a comparison of daily returns of the active portfolioto the passive portfolio over the trading period (download daily portfolio values fromStock Track to an Excel Spreadsheet, remove weekends, calculate returns). You maywant to include the following in your report:o Calculate and compare daily and annualized returns (arithmetic and geometric).o Calculate and compare volatility measures, i.e., standard deviation, range, coefficient of variation.o Compare other characteristics of the return series. o Calculate and discuss the correlation between the active and passive portfolio.o Are markets efficient, nearly efficient, or inefficient (justify based on your trading).
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