...GROUP: 3 INVESTMENT SIMULATION PROJECT NORTH SOUTH UNIVERSITY INVESTMENT SIMULATION PROJECT PREPARED FOR Saif Rahman (SfR) Lecturer COURSE: FIN 435 SECTION: 03 GROUP: 03 PREPARED BY NAME | ID | Md. Sarwar Hossain | 0930068030 | Fatima Tuz Zahra | 0930785530 | Ahmed Aman Yousoof | 0930274530 | Yakin Reza | 0930042030 | Naima Rahman | 0930283030 | Date of Submission: August 08, 2012 TABLE OF CONTENTS | | | Executive Summary | 03 | Introduction | 04 | Objective | 04 | Asset Allocation | 05 | Macroeconomic & Industrial Scene | 07 | Diversification | 07 | Trading Strategies & Economic Rationale for Selecting Stocks | 07 | Portfolio Performance | 10 | Holding Period Return | 13 | Portfolio Risk & Return | 14 | Security Market Line | 15 | Lessons Learned from Trading | 16 | Conclusion | 17 | References | 18 | Appendix | 19 | Executive Summary The investment simulation project is a fictitious investment in the Dhaka Stock Exchange that started from June 4, 2012 and ended on August 01, 2012 over a period of two months and separated in three phases. The initial investment in the portfolio was around BDT 1,000,000. The objective of the project was to maximize the after tax wealth through a well diversified portfolio. Given the consistent market fall at the Dhaka Stock Exchange since our investment period...
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...YMJ Investment – Final Project Throughout the semester we really had to watch the markets in order to obtain a successful portfolio. The way we approached this task was through constant watching of the securities market to find out current trends as well as picking up stocks we thought were undervalued at that time. The latter, of course, applies to our managed portfolio, where we were able to select stocks we deemed were good investments. We observed that this specific portfolio gave us more stable returns, which we attributed to the lower betas of these stocks. One can also conclude that the worst performers of the same portfolio were due the same cause. Based on the returns of our managed portfolio, one can conclude that we chose to take a safe approach and invest in stocks that had low, but steady returns and growths. At the end of the semester, our strategy proved to be successful based on our overall returns. On the other hand, our control portfolio, which takes a passive management approach, had a different outcome. In this type of management, it is imperative that one waits a longer period of time to receive the expected returns. However, we had surprising results as our stocks for this portfolio had large returns. We believe that this exceptional result was due our clever choice of industry. Also, the worst performers of this portfolio presented larger negative returns than we predicted. We also attribute these results to the betas of the stocks that were relatively...
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...i ECO 526 – Financial Economics Team Project Instructor: Paul Fowler Atkinson Term: Fall 2012 Project: Your team is a part of a large Hedge Fund. Your mission is to construct a virtual portfolio using the S&P as your core portfolio, and hedge your risk using options, futures and other derivatives using Stock Track http://www.stocktrak.com/ Objective: Portfolio optimization and hedging. Paper (One per group) 1) Your group paper should cover why you chose the capital markets assets that you did, and how you selected your investments. 2) External data and investment theory should be used, and cited. A minimum of ten citations should be rigorously documented. 3) The team should attempt to hedge your portfolio using “puts” or inverse ETFs. 4) Portfolio changes week to week should be detailed. 5) Your group paper should include an abstract, and introduction, details on portfolio sections, and related investment theory. 6) Paper is to be a minimum of ten written pages, plus extra pages for citations and support. 7) Minimum submittal standards are one inch margins, 12 point Times Roman font, and double spaced. 8) The content matters! The thought process and the explanation of the selection...
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...IFAC Board Exposure Draft November 2012 Comments due: February 28, 2013 Professional Accountants in Business International Good Practice Guidance Project and Investment Appraisal for Sustainable Value Creation IFAC’s mission is to serve the public interest by: contributing to the development of high-quality standards and guidance; facilitating the adoption and implementation of high-quality standards and guidance; contributing to the development of strong professional accountancy organizations and accounting firms and to high-quality practices by professional accountants, and promoting the value of professional accountants worldwide; and speaking out on public interest issues. The PAIB Committee serves IFAC member bodies and professional accountants worldwide who work in commerce, industry, financial services, education, and the public and not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants in business. To achieve this objective, its activities focus on: increasing awareness of the important roles professional accountants play in creating, enabling, preserving, and reporting value for organizations and their stakeholders; and supporting member organizations in enhancing the competence of their members through development and sharing of good practices and ideas. Copyright © November 2012 by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please see page...
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...Becoming a multinational corporation gives the company a chance to grow and profit on a completely different level and could potentially make that corporation a household name worldwide. Not only does this create many opportunities for the company, it allows investors a chance to diversify their portfolios and enter the world of international investing. This project allowed me to learn more about international investing and competition in the global market. Two foreign stocks that trade on U.S. stock exchanges and two U.S.-based multinational corporations were included in the portfolio I created. Anheuser-Busch (BUD), a brewing company founded in 1366, produces, markets, and distributes beer, as well as non-alcoholic beverages. It boasts a portfolio of approximately 200 beer brands. The company’s international brands include Budweiser, Stella Artois, Corona, Beck’s, Leffe and Hoegaarden, while its local brands primarily consist of Bud Light, Skol, Brahma, Antarctica, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, and Jupiler. The company has operations in 24 countries. Anheuser-Busch is a foreign stock, as it is headquartered in Belgium. National Grid (NGG) is also a foreign stock; this company is headquartered in the United Kingdom. National Grid conducts and allocates electricity and gas to industrial, residential, and commercial consumers. The company operates high voltage electricity and gas transmission networks in Great Britain, a gas distribution system in the...
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...Investment Principles and Analysis Trinity University FNCE 3352 Spring 2010 INSTRUCTOR: Carl M. Hubbard, Ph.D., CFA Office: CGC N3l6; phone 999-7283, carl.hubbard@trinity.edu OFFICE HOURS: 9:30 – 11:30 MW; 2:30 – 4:00 TTh; Other times available by appointment. TEXTBOOK: Zvi Bodie, Alex Kane, and Alan J. Marcus. Essentials of Investments, 7th Edition. New York: McGraw-Hill, 2008. CALCULATOR: Texas Instruments BAII Plus Calculator COURSE OBJECTIVES The learning objectives for students in this course are: (l) improve your understanding of financial securities and markets, (2) develop the ability to analyze investment companies, common stocks, and bonds for investment decisions, (3) understand how options are valued and how option contracts are used in hedging and speculating, (4) understand how to apply security analysis techniques in relatively efficient capital markets, and (5) gain practical experience in trading securities. The prerequisite for this course is the completion of FNCE 3301 with a grade of C- or better. REQUIREMENTS OF THE COURSE 1. Complete the assigned readings and problems. 2. Attend and participate in each class meeting. 3. Complete the security analysis project. 4. Complete the three examinations as scheduled. READING AND PROBLEM ASSIGNMENTS The reading and problem assignments are designed to achieve the goals of the course and are to be completed in preparation for the discussion of that...
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...Investment Portfolio Project University of Phoenix Introduction needs to go here | | |5 Yr Average | | | |Return | |T-bond |25% |0.02 | |Microsoft |20% |-0.33 | |Time Warner |10% |0.11 | |Disney |20% |0.02 | |Motorola |10% |-0.05 | |Home Depot |15% |-0.02 | | | | | |Average Return |-0.042 | |Risk Free | |-1.72 | | | | | | | |-1.76 | |STDEV | |0.15 | | | | | |Sharpe | |-11.65 | | | | | | | |5 Yr Average | | | |betas | | | |Return | | | | | |T-bond |25% |0.02 | | |Microsoft |1 | |Microsoft |20%...
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...1. Introduction This is the final project of the Course Named: Investment & Portfolio Analysis. The purpose of this project is to examine thoroughly if the CAPM holds true in the emerging capital market of Pakistan. Tests are conducted for a period of five years (2005-2009), which is characterized by intense return volatility (covering historically high returns over the examined period). 2.1. Karachi Stock Exchange * Incorporated on March 10, 1949 * Premier Stock exchange of the country * Started with 5 companies that had a paid up capital of Rs. 37 million. * Trading was done through an open-out-cry system * The first index was the KSE 50 Index * Exchange owned by 200 members * 652 companies listed * 4 indices * Modern Risk Management System a. Var Based Margin b. Pre Trade Margin Verification * KSE is FIX Compliant * Electronic Trading through KATS * Market capitalization*: US $ 26.04 billion * Publicly Listed Company with strategic investor * Products to include: a. Options b. ETFs c. Tradable Sector Indices d. Debt Market Trading * Broad based investor participation * Cross border listings of companies * Opening up of branches in other cities and in the region 2.2.1. Definition A stock exchange, share market or bourse is a corporation or mutual organization which provides facilities for stock brokers and trader s, to trade company stocks and other...
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...Richman Investments Removable Media Acceptable Use Policy Policy statement It is the goal of Richman Investments to implement the controlled use of removable media devices that transfer information by all users who have access to any means of data within the company. Objective This form is an official Richman Investments document pertaining to the establishment of principles and working practices that are to be abided by all users in order for data to be safely stored and transferred by means of a removable device. The importance of controlling removable media and the objective of this policy is to: 1. Prohibit any unauthorized disclosure of information as may be necessary to company policy. 2. Maintain data integrity. 3. Build network integrity by instilling confidence and trust with data on the network. 4. Keep high standards of security with the use of protected and restricted data. 5. Avoid malicious network intusions. 6. Prevent unintended or malicious harm on the Richman Investments data network. Applicable Parties This policy applies to all Richman Investment employees, members, committees, business partners, third party IT services, guests, or anyone who is approved access to the data network, IT hardware resources, or any equipment with means of access to files within Richman Investments. Removable Devices Defined 1. USB Memory sticks (flash drive) 2. USB or external hard drive 3. Media Card Readers 4. Embedded microchips...
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...Definition of capital budgeting 2 The Major Capital Budgeting Techniques 4 Payback Period 4 Internal Rate of Return 7 Factors Influencing Capital Budgeting 7 Need For Capital Budgeting 7 Capital budgeting project 8 References 9 Definition of capital budgeting Capital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure (debt, equity or retained earnings). Planning the eventual returns on investments in machinery, real estate and new technology are all examples of capital budgeting. Management must allocate the firm's limited resources between competing opportunities (projects), which is one of the main focuses of capital budgeting. Capital budgeting is also concerned with the setting of criteria about which projects should receive investment funding to increase the value of the firm, and whether to finance that investment with equity or debt capital. Investments should be made on the basis of value-added to the future of the corporation. Capital budgeting projects may include a wide variety of different types of investments, including but not limited to, expansion policies, or mergers and acquisitions. When no such value can be added through the capital budgeting process and excess cash surplus exists and is not needed, then management...
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... For a potential project to meet the UWA Plastic guidelines the contribution to net income has to be positive, which is an obtainable and reasonable criterion, seeing as optimal financial decision should maximize shareholder wealth/value of equity. The ITF projects’ average annual addition to EPS is $0.018 meaning it meets the company’s criteria. If the ITF project failed to increase shareholders wealth/value of equity, owners would question the viability of the project and this could lead to a situation in which corporate raiders such as Sir Rony Gabbay intervene, leading to a hostile takeover. Therefore this specific criterion has significant meaning and importance. Payback Period is the amount of time it takes to recover or payback the initial investment. This measure focuses on the liquidity of the investment, with projects with shorter life favoured at the expense of longer life projects, which are more illiquid. Under UWA Plastic criterion the project must recover the initial investment within six years. The ITF project has a payback period of 3.6 years meaning the project would be accepted. However, the payback method may not provide a reliable decision as it ignores the time value of money and also ignores all cash flows that occur after the payback period relies on an ad hoc decision. Therefore, with respect to the three other criteria’s the payback period, should hold the smallest weight when deciding whether to invest in the ITF project. This is exemplified...
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...Problem 12.61 Kitchen Appliances Inc. is a multi-division company with each major product-line managed by a separate division. Divisional managers have complete autonomy with respect to operating and investment decisions. The company evaluates its division managers on ROI, calculated as operating income before taxes (for that year) divided by net book value of assets (at the beginning of that year). The firm pays particular attention to year-over-year growth in ROI as well as budget-actual comparison of the measure. Wendy Miller is the manager of the dishwasher division. Wendy expects that the operating income for the current year will be $2,400,000 before taxes. Given a net asset base of $6,800,000, the division’s ROI would be a healthy 35 percent, well above the average return from other divisions. This performance has been fairly representative of the way things have been going for Wendy. She expects a similar performance next year as well, and is looking forward to her promotion into the C-suite (the corporate office). Toward the end of the current year, an investment opportunity arises for Wendy – the possibility of introducing a new dishwasher model with improved features. The following table presents some salient financial information that Wendy’s managers put together for her evaluation: |Incremental cash outlay for additional equipment |$1,500,000 | |Useful life |10...
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...The return from holding an investment over some period of time is simply any cash payments received due to ownership, plus the change in market price usually expressed as a percent of the beginning market price of the investment. Return comes to you mainly from two sources – income or dividend plus any price appreciation (capital gain or loss) Dt + ( Pt – Pt-1) R = Pt-1 Suppose, you buy for Tk. 100 a security that would pay Tk. 7 in cash to you and be worth Tk. 106 one year later. This return would be (7 +6)/ 100 = 13%. Risk can be defined as the variability of return from those that are expected. In financial decisions it is often helpful to have an objective measure of risk. The main reason for having measuring of risk is to enable us to make better decisions. To be useful, a risk measure should enable us to rank alternative risky ventures. If there are two possibilities being analyzed, A and B, it is often important to know whether A is riskier than B or not. A good measure of risk should also tell us how much more risky A is than B. Is A twice as risky or ten times as risky as B? Is risky at all? Risk measurement procedures are usually based on a particular method of organizing financial problem -through probability distribution. (A set of possible values that a random variable can assume and their associated probabilities of occurrence.) Suppose you are thinking about purchasing stock A, which has a current...
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...1. Compute the Free Cash Flows for the years 2010 to 2020 for both projects See excel File attached. Assumptions: * We assumed the required working capital in table 2 and 3 is the amount required in 2010, for further years we computed the WCR based on the ratio’s of minimum cash balance, number of days sales outstanding, inventory turnover and days payable outstanding (deducting the depreciation as instructed) * We assumed the SG&A and fixed production costs were project specific and therefore included them in the FCF analysis 2. Compute the NPV of both projects. Which would you recommend? What if they are not mutually exclusive? NPVMMDC = 7,150 NPVDYOD = 7,298 Based solely on the NPV analysis we would suggest to implement the DYOD project as it has a higher NPV. If both projects weren’t mutually exclusive, we would suggest implementing both as both have a positive NPV. 3. Compute IRR and payback period for both projects. Based on each criterion, which project would you recommend? If this differs from NPV analysis, explain the deviation? For MMDC: IRR = 23,99%* Payback period = 8 years (assuming the cash flows occur at year end, as instructed) For DYOD: IRR = 18,33%* Payback period = 11 years (assuming the cash flows in 2021 is indeed CF2020*1,03) *For the IRR analysis we drafted a NPV sensitivity graph in order to make sure that there are not 2 possible values for IRR. These graphs are to be found in the excel file attached...
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...are considering a three year expansion project. The Schilling Group is hired to evaluate the progression which involves long term opportunities for investment. We will provide a comprehensive report that outlines and illustrates several techniques that will show and evaluate capital projects, methods used for project selection, weighted average cost to the firm and the cash flow that is anticipated for the project. We will also incorporate the risk into the calculations from two projects. In this report we explain our findings and recommendations about our methodology. Methodology First let’s look at the capital budgeting project process; we evaluate the firms investment project for the long term viability. “The Capital Budgeting Process: The capital budgeting process involves the following five stages: Identification stage: Involves finding potential capital investment opportunities and identifying the type of project. Development stage: Requires estimating relevant cash flows. Selection stage: Involves applying appropriate capital budgeting techniques to help make a final accept or reject decision. Implementation stage: Involves executing accepted projects. Follow-up stage: Involves tracking, reviewing, or auditing a project's outcome” (Block, 2009). By following and using these five stages we are able to show and evaluate their procedures which involve the the long term investment opportunities on their three year project expansion. Argosy wheel expansion will...
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