Fin 315 Instructions For Individual Project For Your Individ

Fin 315 Instructions For Individual Projectfor Your Individual Projec

For your individual project, you will create a portfolio of 10 stocks, with five stocks pre-selected for you and five stocks of your own choosing. You have a total of $100,000 to invest, allocating $10,000 to each stock. Your initial step is to look up the current prices of these stocks, preferably using Yahoo Finance, and calculate how many shares you can buy for $10,000 at the current price, assuming no trading costs. You will record the starting prices using the closing prices as of the Friday you select your stocks.

Using fractional shares, you will purchase the calculated number of shares for each stock at the starting price. Your first spreadsheet entry will reflect these initial purchases, with a total investment of $100,000. Each subsequent week, you will update your spreadsheet by adding that week's closing prices to calculate the current value of your holdings, maintaining your shares, and computing the overall portfolio value. This process will continue weekly until the project concludes.

The spreadsheet should include columns for stock symbol, company name, sector, beta, initial investment, starting shares, starting price, total value as of Friday, number of shares, weekly closing price, and weekly total value. Over time, you will analyze your portfolio, considering sector diversification, beta values, and performance. The final deliverable will be the comprehensive weekly updated spreadsheet along with an analysis of your stock selection, portfolio balancing, and investment performance based on your data and learned concepts.

Paper For Above instruction

Your investment portfolio project provides an excellent opportunity to understand the interplay between stock selection, portfolio management, and market analysis. By actively managing and updating a portfolio of ten stocks—five predetermined and five personally selected—over a series of weeks, you'll gain practical insights into investment strategies, diversification, risk assessment, and performance evaluation.

The foundation of this project involves selecting stocks based on your personal interests and research, then tracking their performance using real market data. Utilizing Yahoo Finance, or similar sources, you start by noting the closing prices of the stocks on the Friday you choose to initiate your portfolio. At this point, you'll calculate the number of shares you can purchase for $10,000 per stock, assuming fractional shares, which allows for more precise allocation and reflects the flexibility of real-world trading platforms.

This initial step is critical as it establishes the baseline for your portfolio. You record the starting prices, number of shares purchased, and the total investment per stock. The initial portfolio value ($100,000) should be confirmed by summing the total value of all holdings based on the starting prices.

Once your initial portfolio is established, weekly updates involve recording the five-day closing prices and recalculating the value of each holding. The total portfolio value fluctuates with market movements, and tracking these changes provides vital insights into your investment's performance over time. This process emphasizes the importance of ongoing monitoring and adjustment, as market dynamics influence your portfolio's composition and risk profile.

In later stages, incorporating sector and beta data will deepen your understanding of diversification and systematic risk. Sector allocation helps examine how industry concentrations affect volatility and returns, while beta measures each stock's sensitivity to market movements. This knowledge enables more informed decision-making to optimize risk-adjusted returns.

Throughout the project, critical analysis of your investment choices is essential. Reflect on why you selected certain stocks, how diversification impacts risk, and how market fluctuations influence your overall strategy. Comparing the performance of your stocks against benchmarks and considering external economic factors will enhance your comprehension of portfolio management principles.

At the conclusion of the project, you will present a comprehensive report, including your weekly spreadsheet updates, an analysis exploring the factors that affected your portfolio’s performance, and lessons learned regarding stock selection, diversification, and risk management.

References

  • Fama, E. F., & French, K. R. (1992). The Cross-Section of Expected Stock Returns. Journal of Finance, 47(2), 427-465.
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  • Bodie, Z., Kane, A., & Marcus, A. J. (2014). Investments. McGraw-Hill Education.
  • Buffett, W. E. (2008). The Superinvestors of Graham-and-Doddsville. Hermes, 44(3), 205-222.
  • Sharpe, W. F. (1966). Mutual Fund Performance. The Journal of Business, 39(1), 119-138.
  • Elton, E. J., & Gruber, M. J. (1997). Modern Portfolio Theory, 1950 to Date. Journal of Banking & Finance, 21(11-12), 1743-1759.
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  • Lintner, J. (1965). The Valuation of Risk Assets and the Selection of Risky Investments in Stock Portfolios and Capital Budgets. The Review of Economics and Statistics, 47(1), 13-37.
  • Fama, E. F., & French, K. R. (1993). Common Risk Factors in The Returns on Stocks and Bonds. Journal of Financial Economics, 33(1), 3-56.

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