StockTrak Financial Portfolio Management Project Purpose

The purpose of this project is to develop a basic knowledge of and expertise in financial markets, investment and portfolio management for the benefit of your career and your personal wealth. This is an individual (i.e. not a group) assignment. Each student is responsible for completing the deliverables noted below. Students may, however, work together to clarify and better understand the Stocktrak process, asset purchase options, sourcing of indices and graphing requirements.

Also, note the Stocktrak help desk information in the student registration materials ('Carlos Hidalgo y Teran' ). Sharing of your portfolio is up to each student.

Objective, Measurement and Deliverables

Utilizing StockTrak, www.stocktrak.com, a virtual real time stock trading platform, you will act as an investment advisor entrusted with investing and managing a $ 250,000 investment account for Mrs. Mary Smith over the 9 week period from April 25, 2016 to June 26, 2016. (The period of April 25, 2016 to May 29, 2016 before and during the course will allow for trial and error practice with this trading platform. All activity before May 29, 2016 will be zeroed out for fresh start after that date.)

Mrs. Smith is living in the United States and is expecting you to invest her money wisely and profitably. While he craves high returns, he also enjoys sleeping at night and dislike losses. He is very concerned about the direction of the markets for stocks and bonds based on the U.S. economic situation. Additionally, Mrs. Smith is nervous about the possibility of Brexit and concerns that Europe (and maybe the US) may fall back into a recession. She has completed the Risk Tolerance Profile (see pre-reading Jordan, Miller and Dolvin, 2011, Bumpy Market Reminds Investors to Assess Their Risk Tolerance) to help guide your allocations and investments on her behalf as follows (you must grade her response): 1.:A, 2a): C, 2b): A, 2c): A, 2d): B, 2e): B, 2f): A, 2g): C, 2h): C, 3a): Yes, 3b): Yes, 3c): yes, 4.: A, 5.: B, 6.: E, 7.: B, 8.: B 2 Specifically, Mrs. Smith has requested the following weighted return criteria be used to guide your efforts. (Valuation, allocation and financial returns will be discussed during the course to assist in your decision making.) • Absolute return (50% weight): % increase in $ 250,000 portfolio (over the 5-week period May 30, 2016 - July 3, 2016) • Risk-adjusted return (50% weight): Return as measured by Sharpe ratio (over the 5-week period May 30, 2016 - July 3, 2016) Mrs. Smith is 40 years old, married with two children (aged 8 and 12). She earns USD 80,000 per year in a secure job with 401K pension plan. Her husband works as a cleaner earning USD 30,000 per year. They have a net worth of USD 250,000 (these are the funds that you are investing for him). The mortgage on their house has an outstanding balance of USD 200,000 (30 years fixed, 5% interest). The family has two cars with a loan value of USD 20,000.