Finance “ Securities Analysis

Finance “ Securities Analysis Objectives: The purpose of this project is to help you apply the valuation techniques learned throughout this course in selecting and trading financial securities. Your grade for this assignment will be based on the quality of your analysis and on the professionalism of your written report. Stock Trading: Each group will create an account with to place trades and keep its progress. Go to the following link to create an online account The Stock Trak provides a great array of resources to help you learn about investing and picking stocks. After you create your group account spend some time getting familiar with the interface of the site and learn about the tools that you have at your disposal. Guidelines: a) Each group will start with a $100,000 portfolio. b) Make your first trade on September 5 and your last on November 14. c) To complete this project you will need to work in groups of 2-3 students. All students are equally responsible for the work that is turned in. d) Each group will work on the written report and submit it by 5:15 p.m. on Wednesday, December 5. e) The written report should be between 4-6 pages in length not counting charts and tables; the document should be 1.5 point line spaced, with a font size of 11 and one inch margins. Trade Details: a) Develop a trading strategy for your group and place your first trade by 3:00 p.m. on September 5. Your trading strategy can be as simple as following the general market by purchasing and holding shares of index ETFs or more complex by making more frequent trades. In either case, you need to explain your trading strategy in the written report and find supporting arguments for your strategy selection. b) Make a purchase or sale of a security based on one of the technical indicators discussed in chapter 8. c) In addition to buying and selling shares of common stock, explore such trading options as buying on margin, completing a short sale, and trading call/put options. d) Four assignments will be given throughout the semester that relate to the trading project. They are graded separately but you can use some parts of your assignments in compiling your written report. Written Report: Your written report should include a comprehensive summary of your trading experience and highlight the various tools and techniques that you learned in this class. Your written report should include the following items: a) Discuss the investment strategy you chose to pursue and any investment constraints you encountered. b) Evaluate the performance of your portfolio by computing the percentage and dollar returns of your portfolio over the trading period. Compute the Sharpe ratio, the Treynor ratio, and Jensen’s alpha of your portfolio. c) Compare the performance of your portfolio with the Dow Jones industrial average (DJIA) and the Standard & Poor’s 500 (S&P 500) index. d) Choose one stock in your portfolio and make buy/sell/hold recommendation. List the supporting arguments for your position. e) Describe any behavioral biases you found yourself subject to in your investment experience. f) Provide a printout of your trades and ending balance from the StockTrak account. Helpful Resources: a) Stock Screener: go to Investing > Stocks > Research Tools > Stock screener. Once you open the Stock Screener, go to File > Open Screen > From Preset Screens. b) Technical analysis techniques: > Investing > Education > Charts. c) Guru Screener: go to Investing > Trading Tools > Guru Screener. d) Stock Screener: go to Stocks > Tools > Stock Screener

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