Explain why you allocated your assets as you did.

Discussion posts and trading activities for the class will take place in the Investment Game Workroom. Your required activity is outlined below:

Game registration and initial stock picks (2% of Course Grade)

Register for the game by following the instructions provided by your professor.

Assemble your initial portfolio prior to the close of the markets of Week2.

Week 2, post a brief rationale in the Investment Game discussion board:

Why did you choose your companies? Specifically, what market news, metrics, or other data led to you to pick these specific stocks?

Share resource(s) you consulted to make your choice.

Explain why you allocated your assets as you did.

What benchmark are you measuring yourself against and why?

Determine the type of investor who would be the best candidate for the chosen investment (e.g., a risk-averse investor, an aggressive investor, a broker, and a dealer in the market).

Investment Analysis

Now that you have done the research and made a selection on the stock of a publicly traded U.S. corporation in your first assignment, in Week 4, it’s time to take a closer look at your choice with a detailed analysis. To complete this assignment, refer to the scenario from your first assignment, Investment Selection.

Note: Include any financial statements or relevant financial information in an appendix after the “Sources” page in your paper. These links or additional documents are not included in the required page length.

Write a 4–6 page paper in which you do the following:

Provide a detailed overview of the stock of the publicly traded U.S. corporation you selected in the assignment of Week 4. Provide the rationale for your selection and plans for a diversified portfolio.
Select five financial ratios, then analyze the past three years of financial data for the investment (please obtain data from the financial statements or the equivalent).

Analyze the price of the investment to stock market beta for the past five years.

Create a trend line that depicts the price movement for the investment against the market index movement using elements of Microsoft Office, such as Excel, Visio, MS Project, or one of their equivalents (such as Open Project, Dia, and OpenOffice), as appropriate. Note: The graphically depicted solution is not included in the required page length.

Determine the type of investor who would be the best candidate for the chosen investment (e.g., a risk-averse investor, an aggressive investor, a broker, and a dealer in the market). Provide a rationale for why this investment is a solid choice. Support your assertion that someone with the investor profile you outlined should invest in this stock.

Use at least five quality academic resources in this assignment. Note: Wikipedia and similar websites do not qualify as academic resources. Visit the Strayer University Library.

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course.
The specific course learning outcome associated with this assignment is:

Propose why an investment is solid and who should invest in it.

Explain in detail why the portfolio performs better (or worse) than the benchmark.

Financial investment

As a recently qualified financial advisor, you are helping a client invest her £100,000 inheritance. You plan to divide the client’s capital into 3 parts. The first part consists of only individual stocks. The second part employs only passive strategies by investing in ETFs and tracker funds. In the third part, capital is allocated to derivatives.

Before committing the fund, you decide to backtest the investment and present a portfolio report to the client.

Required:

1. In the first part of the portfolio, choose minimum of 5 stocks. You can consider equity stock in any financial market, and choose any market available in Bloomberg, but you are limited to trade only equity stocks (no ETFs nor index funds) on major exchanges. You need to explain to the client choices of each stock. To convince her that these stocks are good financial bet, your analysis and discussion should include aspects such as: choice of a particular market; its overview and major characteristics; stocks’ valuation expectation of the stocks’ future performance; the criteria used to select stocks; capital allocation of each stock; reasons of allocation etc. Bloomberg equity screening function (EQS) can help with this task.

2. In the second part, choose minimum of 5 ETFs or index funds. Justify your selection, apply the same analysis and rationale as above. But you are limited to trade only ETFs and index funds in this part.

3. In the third part, choose at least 1 option contract. The option can be a hedging position or a purely speculative position or both. If it is used for hedging, demonstrate how the position protect value of the overall portfolio. If the option position is speculative, explain your rationale and justify

4. Backtest the portfolio using stock prices from 4th October to 6th December 2021, how did the portfolio perform against a chosen benchmark? What is return and risk of the portfolio? Discuss which portfolio performs better during the back testing period, the benchmark or your portfolio? Explain in detail why the portfolio performs better (or worse) than the benchmark. Bloomberg portfolio management function (PORT) can help with this task.

5. As a quality assurance, present a scenario analysis to the client. Hypothetical analysis of the portfolio if a crisis (in scale similar to COVID-19 or the 2008 crisis) strikes. Is your portfolio crisis proof? Why? If not, how can you reduce exposure to a financial crisis. Analysis do not need to be quantitative, discursive discussion is fine.

Why might the fund management be interested in diversification into emerging markets?Are they right to recommend such a diversification?

Individual Task Based Investment Project

What am I required to do in this assignment?

You work for the 3 Rs Wealth Management LTD, an investment fund that specialises in financial securities investment. Your fund currently holds an international portfolio of equities including US, European, and Japanese stocks. The fund management is considering a further diversification of the fund portfolio and contemplates the possibility of investing in some emerging markets (in South Asia, Eastern Europe, and Latin America) or diversifying by adding different assets types including Fixed Income Securities, Any sector sectors Indexes, Commodities and Cash equivalent securities You are asked to analyse the optimality of such a diversification in the mean-variance framework. Your manager requires you to write a report that should summarise and critically discuss your empirical findings, as well as provide a recommendation about the inclusion of emerging market stocks in the portfolio of your fund. Your manager sets very high standards and expects a professional report that he can present to the fund’s clients.

Detailed problem description

1 Why might the fund management be interested in diversification into emerging markets?Are they right to recommend such a diversification? Answer these questions citing some empirical evidence.

2 Obtain monthly total return index data for the following 5 equity markets indexes, in US dollar terms, for the 5-year period from October 2016 to September 2020 (the names of the corresponding indices provided in parentheses), plus two financial asset indexes f your choices: (Bonds, Commodities, Derivatives, Cash indexes etc)

US (MSCI USA)

Europe (MSCI EUROPE U$)

Japan (MSCI JAPAN U$)

Pacific, excl. Japan (MSCI PACIFIC EX JP U$)

Latin America (MSCI EM LATIN AMERICA U$)

Index 1

Index 2

Compute monthly returns for each series. Obtain the current US risk-free rate of interest.1 Compute the mean and standard deviation of each series and the variance-covariance matrix. Obtain monthly total return index for the US dollar-based MSCI World equity index (MSCI WORLD U$) and compute its returns.3- In order to estimate expected returns, you decide to use the CAPM. Estimate the beta of the six indices listed above with respect to the MSCI All Country index. Use these estimates of beta in order to compute the CAPM expected return of these 7 indices.

4 Compute the efficient frontier for (i) the first three markets (i.e. US, Europe, Japan) and (ii) all the 7 markets considered. Assume that investors can borrow and lend at the risk free rate of interest and that they are able to take short positions. How does diversification into emerging markets or other assets affect the efficient set?

5 In the light of existing empirical evidence and your own findings, what are your recommendations? Should the fund expand on emerging markets, consider new assets or focus to its current strategy.

6 Suppose that your fund is not allowed to take short positions in any of the markets. How would such a restriction affect the conclusion you have drawn in Questions 4 and 5?

7 Critically reflect on the limitations of your analysis.

You must produce all the spread sheet and graphs in your report.

Discuss how the financial planning model developed for Tom Gifford can be used as a template to develop a financial plan for any of the company’s employees.

Simulation Modeling for Financial planning

After some research, Tom and Kate decided to assume that the annual salary growth rate would vary from 0% to 5% and that a uniform probability distribution would provide a realistic approximation. Four Corners’ accountants suggested that the annual portfolio growth rate could be approximated by a normal probability distribution with a mean of 10% and a standard deviation of 5%. With this information, Tom set off to redesign his spreadsheet so that it could be used by the company’s employees for financial planning.

Managerial Report

Play the role of Tom Gifford and develop a simulation model for financial planning. Write a report for Tom’s boss and, at a minimum, include the following:

1. Without considering the random variability, extend the current worksheet to 20 years. Confirm that by using the constant annual salary growth rate and the constant annual portfolio growth rate, Tom can expect to have a 20-year portfolio of $772,722. What would Tom’s annual investment rate have to increase to in order for his portfolio to reach a 20-year, $1,000,000 goal? (Hint: Use Goal Seek.)

2. Redesign the spreadsheet model to incorporate the random variability of the annual salary growth rate and the annual portfolio growth rate into a simulation model. Assume that Tom is willing to use the annual investment rate that predicted a 20-year, $1,000,000 portfolio in part 1. Show how to simulate Tom’s 20-year financial plan. Use results from the simulation model to comment on the uncertainty associated with Tom reaching the 20-year, $1,000,000 goal.

3. What recommendations do you have for employees with a current profile similar to Tom’s after seeing the impact of the uncertainty in the annual salary growth rate and the annual portfolio growth rate?

4. Assume that Tom is willing to consider working 25 more years instead of 20 years. What is your assessment of this strategy if Tom’s goal is to have a portfolio worth $1,000,000?

5. Discuss how the financial planning model developed for Tom Gifford can be used as a template to develop a financial plan for any of the company’s employees.

Critically evaluate the impact of ONE specific emerging technology on the future of your business and make useful recommendations to future managers.

Reflective report based on SoleMates company

SUBMITTING YOUR ASSIGNMENT:

In order to achieve full marks, you must submit your work before the deadline. Work that is submitted late – up to five working days after the published submission deadline – will be accepted and marked. However, the element of the module’s assessment to which the work contributes will be capped with a maximum mark of 40%.
Work cannot be submitted if the period of 5 working days after the deadline has passed (unless there is an approved extension). Failure to submit within the relevant period will mean that you have failed the assessment.

ASSIGNMENT

Produce an individual 3,000 word Reflective Business Strategy Report, following your active participation in the BSG:

The Tasks

1. Evaluate the major strategic decisions made during the six–round BSG simulation. Reflect on one round that stood out, why and key lessons learnt. 30 marks

2. Reflect on relevant theoretical frameworks applicable to understanding the internal,external and competitive environments of your business; and discuss how these frameworks helped in shaping decisions made in your BSG. 30 marks

3. Critically evaluate the impact of ONE specific emerging technology on the future of your business and make useful recommendations to future managers. 30 marks

4. Present a high standard and professional reflective report. 10marks

Explain why you are unable to create a positive alpha strategy.

Discussion Questions

You are an active fund manager. For each of the recent events given below discuss, whether the event is exploitable by you to create a positive alpha for your portfolio. If the event is exploitable,outline a strategy that you will use to create the positive alpha. For events that are not exploitable, explain why you are unable to create a positive alpha strategy.

1.Retail traders aggressively buy ‘meme’ stocks targeting stocks short-sold by hedge funds.

2.Major governments in the world provide incentives for the use of hydrogen as a fuel.

3.Major fund management companies increase their allocations to Chinese equities.

4.Trading platforms such as Robinhood impose bans on individual traders trading meme stocks.

5.The regulator decides to ban ALL analysts’ reports due to potential conflicts of interest.

6.Cybersecurity breaches become very common.

7.Major central banks permit investors to hold cryptocurrencies.

8.Major central banks of the world exit quantitative easing.

Consider the key risk factors investors must observe when making their investments and also the time value of money concept and its relevance in the financial industry.

Time Value of Money and Risk and Return

First, locate the financial statement (10 – K Annual Reporting) information for each company (listed below) that you will be investigating for your final project. This information can be found on each company’s website within the “About U s” section or at the bottom of the homepage under “Investors.”

Research stock and corporate bond holdings for the following companies:

Apple, Inc. (AAPL)
Caterpillar (CAT)
Consolidated Edison (ED)
Northern Trust (NTRS)
Macy’s (M)

Next, address the following:

Calculate the rates of return for each of the securities listed.

Once you have calculated the rates of return for these securities, briefly explain the risk/return relationship for each security.

Refer to the module resources and major indices to support your responses.

Be sure to consider the key risk factors investors must observe when making their investments and also the time value of money concept and its relevance in the financial industry.

To complete this assignment, review the Module One Journal Guidelines and Rubric PDF document.

What are the advantages and disadvantages of investing in the UK, alternative investments,economic and investment outlook.

Investment Management

Assume you are an investment manager working for XYZ Investment Bank. Your client, a high net worth citizen wants to make a long-term £1m investment in the UK but needs expert advice before they can make their investment. The client is mainly interested in three UK subsectors: Automobiles & Parts, Banking and Construction& Housing and investment advice on one specific stock to pick from each sector.

Required
Using fundamental analysis, relevant investment theories and academic literature, write a 4000-word report giving advice to your client regarding investing in the UK(considering their requirements above) .

Your report should include:

An analysis of the UK economic situation as at 20 August 2021

A sectorial report on each of the three subsectors listed above

An analysis and evaluation of three UK publicly listed companies in the above mentioned three sectors including an evaluation of their corporate social responsibility

An evaluation of the firm’s financial statements to identify strengths and weaknesses, the competitive position of the company, profit margins and the dynamics of company earnings, the composition and liquidity of corporate resources (the company’s asset mix),the company’s capital structure (its financing mix) and a stock price based on one of the valuation models

What are the advantages and disadvantages of investing in the UK, alternative investments,economic and investment outlook

Use recent academic literature and relevant data to support your writing.