Category Archives: Archieve

International Financial Management: Study questions (Part 2)

Category : Archieve

International Financial Management

Study Questions (Part 2)

  1. Please explain the “Fixed Exchange Rate System”. What are the pros and cons of this system?
  2. Please explain the “Freely Floating Exchange Rate System”. What are the pros and cons of this system?
  3. Please explain the “Managed Float Exchange Rate System”. What are the pros and cons of this system?
  4. Please explain the “Pegged Exchange Rate System”. What are the pros and cons of this system?
  5. What is Dollarization? What are the pros and cons of Dollarization?
  6. Please explain the “Single European Currency (EURO)”. When was it created? Why was it created? What are the pros and cons of individual countries adopting EURO versus their own currency?
  7. Why do governments interfere with foreign exchange markets? Please list all the reasons we discussed in class.
  8. How do governments interfere with foreign exchange markets? Please list all the methods we discussed in class.
  9. What is direct government intervention in foreign exchange markets? What is the indirect government intervention in foreign exchange markets? What is sterilized government intervention in foreign exchange markets?
  10. What is the importance of foreign currency reserves for governments who interferes in foreign exchange markets?
  11. What is “Locational Arbitrage?” Please explain with an example.
  12. What is “Triangular Arbitrage?” Please explain with an example.
  13. What is “Covered Interest Arbitrage?” Please explain with an example.
  14. What is an option contract? What are the main differences between buying the actual currencies and buying a call option for the exact same amount of currencies? Please discuss in terms of maturity, premium, cost and risk.
  15. There are two parts to option prices: 1) Intrinsic value and 2) premium. Please explain each. What determines the intrinsic value? How is intrinsic value calculated? What factors determine the premium and how (i.e. does volatility increase or decrease the option premiums)?
  16. What is a call option? What is a put options? What is a strike price? What is a maturity date?
  17. Please draw the contingency charts for 1) purchased call option, 2) purchased put option, 3) written call option, 4) written put option.
  18. How can an investor speculate with options? Please explain with an example (similar to our class examples).
  19. How can an investor hedge with options? Please explain with an example (similar to our class examples and our two case studies).
    20. What is a futures contract? Please explain the differences between futures and forwards. What type of investors would be likely futures investors? What type of investors would be likely forwards investors.
  20. What are the differences between futures and options?
  21. The following table is the BMW.DE price as of Friday, April 29th. Current foreign exchange rate of USD per EUR is 1.15.
    • You need to buy $10,000 worth of BMW.DE, how many shares of BMW.DE do you need to buy?
    • You need to hedge your EUR/USD currency exposure using options on FXE. FXE is denominated in USD and represents 100EUR per share of FXE. Each option contract you buy is 100 shares of FXE. How many contracts do you need to buy? Do you need to buy Call or Put options?
    • If USD per EUR moves to 1.10, what happens to the value of your investment and your hedge? (all in USD).
  22. The following table is the table we studied in class to show there can’t be any arbitrage opportunities. Assuming there are no arbitrage opportunities, what should be the exchange rate USD per EUR a year from now?

    Screen Shot 2016-05-01 at 11.10.43 AM

  23. Currently JPY / USD exchange rate is 121.60. After carefully reading the market reviews by other financial analysts, you expect JPY to gain 10% in value within the next month. What is the new exchange rate?
    • A client instructs you to speculate on his account up to $1 million. Also, since your client is Japanese, he has valuable information about the Japanese market and expects a Japanese company that is currently trading at ¥ 2,125 to appreciate by 7% by the end of next month. What is the expected price of this Japanese company? Keeping in mind the current exchange rate and your expectation about the exchange rates, if you purchase the Japanese stock today, how much profit could you realize by the end of the month in USD?
    • For the same Japanese stock a call option with a strike price of ¥ 2,100 can be purchased for ¥ 71.47 per share. The maturity for this option is one month. Similarly, a put option with a strike price of ¥ 2,150 can be purchased for ¥ 73.15 per share. You are free in your trading strategy as long as you make profit for your client. Based on your answer for the previous part, by purchasing the call or the put option, how much profit could you realize by the end of the month in USD?
    • If you prefer to have an option against the JPY vs. USD appreciation, call options have a market price of ¥30,812.5 for a strike price of 120 JPY/USD. Each contract is for $125,000. (This call option would allow you to buy JPY with USD at 120 JPY/USD). These options also have maturities of one month. Similarly, put options have a market price of ¥29,500 for a strike price of 115 JPY/USD. Based on your answer in the previous part, by purchasing the call or the put option, how much profit could you realize by the end of the month in USD?
    • How could you change the trading strategy if you do not want to buy the options but instead you prefer futures? What would you achieve by using futures instead of options?

Comparing portfolios: Finding your company

Category : Archieve

Comparing portfolios: Finding your company

Please make sure you have the most updated mfd_dm and mfd_ta packages for Stata installed for this post.

*
net from "http://www.researchforprofit.com/stata/mfd_dm"
net from "http://www.researchforprofit.com/stata/mfd_ta"
* click on the blue mfd_dm package and then "click here to install" 
*
*
clear all
cd "/Users/mfd/Desktop"
use "http://researchforprofit.com/data_public/FIN400_2014_prices.dta", clear

collapse (sum) ln*
xpose, clear varname format
gen symbol = substr(_varname,4,.)
sort v1

browse if symbol == "AAPL"
*

Portfolio comparison (price-to-earnings ratio)

Category : Archieve

Compare the daily returns for two portfolios: Based on price-to-earnings ratio

*
clear all
cd "/Users/mfd/Desktop"
* This directory is for me. You need to use your own working directory.


* Get the list of all DJI component companies (^DJI)
mfd_dm_components, symbol(^DJI)
levelsof Symbol, local(tickers)

local counter=1
foreach aa of local tickers {
	di "BS `counter': `aa'"
	clear
	qui: capture: mfd_dm_statements `aa', freq(a) st(BS) type(wider)
	if (_rc==0) { 	
		qui: if (`counter'!=1) append using BS.dta
		qui: save BS.dta, replace
		local counter = `counter'+1	
	}
}

replace price = subinstr(price,",","",1)
destring price, gen(price2)
gen pe=price2/( net_income/ shares)

keep symbol name date pe
keep if (year(date)==2014)
replace pe = abs(pe)
sort pe

* Low portfolio Symbols
* We use 1 to 3 because we want to include first 3 companies into our portfolio
forval aa=1/3 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}


* High portfolio Symbols
* We use 23 to 25 because we want to include the last 3 companies into our portfolio
forval aa=23/25 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return /3
* we divide by 3 because we included 3 companies into our portfolio


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return /3
* we divide by 3 because we included 3 companies into our portfolio


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return
*

It may be the case that you may have slow internet connection. In this case your download of S&P-500 companies’ financial statements will either take forever or will not complete.
The following part of the above code is to download the data:

*
* Get the list of all DJI component companies (^DJI)
mfd_dm_components, symbol(^DJI)
levelsof Symbol, local(tickers)

local counter=1
foreach aa of local tickers {
	di "BS `counter': `aa'"
	clear
	qui: capture: mfd_dm_statements `aa', freq(a) st(BS) type(wider)
	if (_rc==0) { 	
		qui: if (`counter'!=1) append using BS.dta
		qui: save BS.dta, replace
		local counter = `counter'+1	
	}
}
*

So, instead of downloading this data one-by-one, you can actually download the data as a whole (i.e. I downloaded the data for you and made it available for download in one file).
The original code then would become as follows:

*
clear all
cd "/Users/mfd/Desktop"
* This directory is for me. You need to use your own working directory.

use "http://researchforprofit.com/data_public/FIN400_financial_statements.dta", clear

replace price = subinstr(price,",","",1)
destring price, gen(price2)
gen pe=price2/( net_income/ shares)

keep symbol name date pe
keep if (year(date)==2014)
replace pe = abs(pe)
sort pe

* Low portfolio Symbols
* We use 1 to 3 because we want to include first 3 companies into our portfolio
forval aa=1/3 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}


* High portfolio Symbols
* We use 23 to 25 because we want to include the last 3 companies into our portfolio
forval aa=23/25 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return /3
* we divide by 3 because we included 3 companies into our portfolio


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return /3
* we divide by 3 because we included 3 companies into our portfolio


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return

*

Portfolio comparison (debt-to-asset ratio)

Category : Archieve

Compare the daily returns for two portfolios: Based on debt-to-assets ratio

*
clear all
cd "/Users/mfd/Desktop"
* This directory is for me. You need to use your own working directory.


* Get the list of all DJI component companies (^GSPC)
mfd_dm_components, symbol(^GSPC)
levelsof Symbol, local(tickers)

local counter=1
foreach aa of local tickers {
	di "BS `counter': `aa'"
	clear
	qui: capture: mfd_dm_statements `aa', freq(a) st(BS) type(wider)
	if (_rc==0) { 	
		qui: if (`counter'!=1) append using BS.dta
		qui: save BS.dta, replace
		local counter = `counter'+1	
	}
}

gen liabities_to_assets = total_liabilities/total_assets
keep symbol name date liabities_to_assets
keep if (year(date)==2014)
sort liabities_to_assets

* Low portfolio Symbols
* We use 1 to 3 because we want to include first 3 companies into our portfolio
forval aa=1/3 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}


* High portfolio Symbols
* We use 23 to 25 because we want to include the last 3 companies into our portfolio
forval aa=23/25 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return /3
* we divide by 3 because we included 3 companies into our portfolio


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return /3
* we divide by 3 because we included 3 companies into our portfolio


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return
*

It may be the case that you may have slow internet connection. In this case your download of S&P-500 companies’ financial statements will either take forever or will not complete.
The following part of the above code is to download the data:

*
* Get the list of all DJI component companies (^DJI)
mfd_dm_components, symbol(^DJI)
levelsof Symbol, local(tickers)

local counter=1
foreach aa of local tickers {
	di "BS `counter': `aa'"
	clear
	qui: capture: mfd_dm_statements `aa', freq(a) st(BS) type(wider)
	if (_rc==0) { 	
		qui: if (`counter'!=1) append using BS.dta
		qui: save BS.dta, replace
		local counter = `counter'+1	
	}
}
*

So, instead of downloading this data one-by-one, you can actually download the data as a whole (i.e. I downloaded the data for you and made it available for download in one file).
The original code then would become as follows:

*
clear all
cd "/Users/mfd/Desktop"
* This directory is for me. You need to use your own working directory.

use "http://researchforprofit.com/data_public/FIN400_financial_statements.dta", clear

gen liabities_to_assets = total_liabilities/total_assets
keep symbol name date liabities_to_assets
keep if (year(date)==2014)
sort liabities_to_assets

* Low portfolio Symbols
* We use 1 to 46 because we want to include first 46 companies into our portfolio
forval aa=1/46 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}


* High portfolio Symbols
* We use 417 to 463 because we want to include the last 3 companies into our portfolio
forval aa=417/463 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	capture: replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return / 46
* we divide by 46 because we included 46 companies into our portfolio


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	capture: replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return / 46
* we divide by 46 because we included 46 companies into our portfolio


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return

*

How to find a company: PNR

*
clear all
cd "/Users/mfd/Desktop"
* This directory is for me. You need to use your own working directory.
 
use "http://researchforprofit.com/data_public/FIN400_financial_statements.dta", clear
 
gen liabities_to_assets = total_liabilities/total_assets
keep symbol name date liabities_to_assets
keep if (year(date)==2014)
sort liabities_to_assets

br if symbol=="PNR"
*

We are at 4th portfolio. We will now compare the 4th portfolio to the highest portfolio.

*
* Low portfolio Symbols
* We use 141 to 187 because we want to include first 46 companies into our portfolio
forval aa=141/187 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}


* High portfolio Symbols
* We use 417 to 463 because we want to include the last 3 companies into our portfolio
forval aa=417/463 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	capture: replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return / 46
* we divide by 46 because we included 46 companies into our portfolio


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	capture: replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return / 46
* we divide by 46 because we included 46 companies into our portfolio


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return
*

Portfolio comparison (based on total returns)

Category : Archieve

Compare the daily returns for two portfolios: Based on total returns

*
clear all
cd "/Users/mfd/Desktop"
mfd_dm_components_cnn
levelsof Symbol, local(tickers)
mfd_dm_prices `tickers', freq(d) chg(ln) start(01jan2014) end(31dec2014)
save 2014_prices.dta

* Total 2014 return
use 2014_prices.dta, clear
collapse (sum) ln*
xpose, clear varname format
gen symbol = substr(_varname,4,.)
sort v1

* Low portfolio Symbols
forval aa=1/50 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}

* High portfolio Symbols
forval aa=447/497 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return / 50


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return / 50


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return
*

Or, if you are downloading the file I prepared:

*

clear all
cd "/Users/mfd/Desktop"
use "http://researchforprofit.com/data_public/FIN400_2014_prices.dta", clear

collapse (sum) ln*
xpose, clear varname format
gen symbol = substr(_varname,4,.)
sort v1

* Low portfolio Symbols
forval aa=1/50 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}

* High portfolio Symbols
forval aa=447/497 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return / 50


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return / 50


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return
*

Portfolio comparison (based on risk)

Category : Archieve

Compare the daily returns for two portfolios: Based on risk

*
clear all
cd "/Users/mfd/Desktop"
mfd_dm_components_cnn
levelsof Symbol, local(tickers)
mfd_dm_prices `tickers', freq(d) chg(ln) start(01jan2014) end(31dec2014)
save 2014_prices.dta

* Total 2014 risk
use 2014_prices.dta, clear
collapse (sd) ln*
xpose, clear varname format
gen symbol = substr(_varname,4,.)
sort v1

* Low portfolio Symbols
forval aa=1/50 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}

* High portfolio Symbols
forval aa=447/497 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return / 50


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return / 50


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return
*

Or, if you are downloading the file I prepared:

*

clear all
cd "/Users/mfd/Desktop"
use "http://researchforprofit.com/data_public/FIN400_2014_prices.dta", clear

collapse (sd) ln*
xpose, clear varname format
gen symbol = substr(_varname,4,.)
sort v1

* Low portfolio Symbols
forval aa=1/50 {
	local LP_symbols="`LP_symbols' " + symbol[`aa']
}

* High portfolio Symbols
forval aa=447/497 {
	local HP_symbols="`HP_symbols' " + symbol[`aa']
}


* Let's see which companies are in each portfolio
di "`LP_symbols'"
di "`HP_symbols'"


* Let's download the daily prices
mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan2015)


* Let's calculate the equally weighted LOW portfolio returns
gen LP_portfolio_return = 0
foreach company in `LP_symbols' {
	replace LP_portfolio_return = LP_portfolio_return + ln_`company'
}
replace LP_portfolio_return = LP_portfolio_return / 50


* Let's calculate the equally weighted HIGH portfolio returns
gen HP_portfolio_return = 0
foreach company in `HP_symbols' {
	replace HP_portfolio_return = HP_portfolio_return + ln_`company'
}
replace HP_portfolio_return = HP_portfolio_return / 50


* Now, we test
ttest LP_portfolio_return = HP_portfolio_return
*

Portfolio comparison (based on dividend yields)

Category : Archieve

Compare the daily returns for two portfolios: Based on dividend yields

*
clear all
cd "/users/mfd/desktop"

* Get the list of all DJI component companies (^GSPC)
mfd_dm_components, symbol(^GSPC)
levelsof Symbol, local(tickers)

foreach aa of local tickers {
	mfd_dm_prices `aa', freq(v) start(01jan2009)
	capture: summ dividends_`aa'
	if (_rc==0) {
	        capture: mfd_dm_prices `aa', freq(d) chg(ln) start(01jan2009) merge
		replace dividends_`aa' = dividends_`aa' / adjclose_`aa'
		gen year=year(date)
		collapse (sum) dividends_`aa', by (year)
		
		gen symbol="`aa'"
		rename dividends_`aa' dividends		
		
		capture: append using temp.dta
		save temp.dta, replace
	}
}
save dividends.dta, replace
tabstat dividends, by(year) stat(mean count)

quiet: {
    forval year=2009/2014 {
        local next_year = `year' + 1

        use dividends.dta, clear
        keep if year==`year'
        drop if dividends==0 | dividends==.
        sort dividends
 
        local obs = _N
        local low_number = round(_N/10)
        local high_number = _N - `low_number'

        * Low portfolio Symbols
        forval aa=1/`low_number' {
        	local LP_symbols="`LP_symbols' " + symbol[`aa']
        }
 
        * High portfolio Symbols
        forval aa= `high_number' / `obs' {
        	local HP_symbols=" `HP_symbols' " + symbol[`aa']
        }

        * Let's see which companies are in each portfolio
        di "`LP_symbols'"
        di "`HP_symbols'"
 
        * Let's download the daily prices
        mfd_dm_prices `LP_symbols' `HP_symbols', freq(d) chg(ln) start(01jan`next_year')
 
        * Let's calculate the equally weighted LOW portfolio returns
        gen LP_portfolio_return = 0
        foreach company in `LP_symbols' {
        	replace LP_portfolio_return = LP_portfolio_return + ln_`company'
        }
        replace LP_portfolio_return = LP_portfolio_return / `low_number'
 
        * Let's calculate the equally weighted HIGH portfolio returns
        gen HP_portfolio_return = 0
        foreach company in `HP_symbols' {
        	replace HP_portfolio_return = HP_portfolio_return + ln_`company'
        }
        replace HP_portfolio_return = HP_portfolio_return / `low_number'
 
        * Now, we test
        noi: di "`next_year'"
        noi: ttest LP_portfolio_return = HP_portfolio_return
    }
}


*


Case Study (FIN-700): Financial Portfolio Management

Category : Archieve

Case Study (FIN-700): Financial Portfolio Management

Educational purposes only…

Purpose

  • Form a financial securities portfolio with diverse securities
  • Use options with the purpose of hedging
  • Conduct a detailed research about financial securities as well as financial markets.
  • Apply the theory of diversification
  • Apply the Capital Asset Pricing Model
  •  

    Rules

  • Trading Game is used for the portfolio formation.
  • You need to use one username for the entire case study (i.e. same username for all transactions).
  • Your username for this case study must be unique to this case study (i.e. you cannot use a username you already had for other case studies).
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • If you submit this case study in a timely manner then you can resubmit this case study for a second time (with a new username). There is no third resubmission.
  • You need to have a new username for the second submission.
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You can use Stata (completely voluntary) to trade or check your work.
  •  

    Directions:

  • (5 points) Maximum allowed funds (based on cost) for the portfolio is $500,000.
  • (5 points) Minimum allowed funds (based on cost) for the portfolio is $475,000.
  • (5 points) You need to buy at least 20 different stocks in your portfolio.
    • (5 points) Within these 20 stocks: you need to have at least five different industries.
    • (5 points) Within these 20 stocks: you need to have at least three different US markets.
    • (5 points) Within these 20 stocks: you need to have at least five different currencies (other than US dollars).
    • (10 points) For each of the 20 stocks: you need to buy at least one put option, with at least three months to maturity, as a hedge.
  • (5 points) You need to buy at least 5 different ADRs in your portfolio.
  • (7.5 points) You need to buy at least 10 different ETFs in your portfolio.
  • (7.5 points) You need to buy at least 10 different mutual funds in your portfolio.
  • (7.5 points) You need to buy one call option, with at least three months to maturity, for 5 different stocks that are not included within your portfolio as speculative positions.
  • (7.5 points) You need to short at least 5 different stocks (different than the above 20) in your portfolio.
  • (25 points) Your entire portfolio Beta needs to be as close to 1 (one) as possible. When estimating portfolio beta:
    • You can use Standard and Poor’s 500 index as the market.
    • You needn’t include the short position.
    • You shouldn’t include the options.
    • You should include stocks, ADRs, ETFs, mutual funds, and foreign stocks.
  •  

    Please note:

  • Cost of options (calls or puts) should not be included in the portfolio value.
  • You receive funding when you short stocks. Your overall portfolio needs to be between $475,000 and $500,000. Thus (for instance), if you short a stock worth $1,000 then you need to buy another stock worth $1,000 to off-set the effect of shorting.
  • Grading:

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 15% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 15 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 12 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 9 points to any ONE of your exams.

     

     


    Case Study (FIN-893): Option Trading Strategies

    Category : Archieve

    Case Study (FIN-893): Option Trading Strategies

    Educational purposes only…

    Option Trading Strategies

    Following the examples we have done in class, please complete the following option trading strategies:

    • Bull Spread Using Calls
    • Bull Spread Using Puts
    • Bear Spread Using Calls
    • Bear Spread Using Puts
    • Box Spread
    • Butterfly Spread Using Calls
    • Butterfly Spread Using Puts
    • Calendar Spread Using Calls
    • Calendar Spread Using Puts
    • A Straddle Combination
    • A Strip
    • A Strap
    • A Strangle Combination

    Rules

    • Trading Game is used for the portfolio formations.
    • You need to use one username for the entire case study.
    • Your username for this case study must be unique to this case study (i.e. you cannot use a username you already had for other case studies).
    • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
    • Once you trade a security, it is reserved. It cannot be traded by anybody else.
    • You need to let me know when you are done so that I can grade your work.
    • When you are done, please email me your username.

    Grading:

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 10% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 10 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 8 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 6 points to any ONE of your exams.

     
     

     


    Case Study (FIN-325): International Portfolio with Target Beta

    Category : Archieve

    Case Study (FIN-325): International Portfolio with Target Beta

    Educational purposes only…

    PLEASE NOTE: You need a new username for this case study.

    Purpose

  • Form an international financial securities portfolio with a target beta
  • Review and apply the capital asset pricing theory
  • Conduct a detailed research about financial securities as well as international financial markets
  •  

    Rules

  • Trading Game is used for the portfolio formations.
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • You need to estimate the individual Betas for this assignment. Please use Beta estimation post that I provided on this site. If Beta cannot be estimated (you receive an error message) for the selected foreign security, please do not use that security.
  • Please use 12 months for your time period for Beta estimations.
  • You need to have a balanced portfolio
  • You can only trade foreign securities (no US stocks, ETFs, mutual funds, ADRs, options etc.)
  • You can only have long positions (no short positions)
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You can use Stata (completely voluntary) to trade or check your work.
  •  

    Directions:

  • Maximum allowed funds (based on cost) for the stocks is $250,000. No partial credit is given if portfolio value is more than $250,000.
  • Minimum allowed funds (based on cost) for the stocks is $245,000. No partial credit is given if portfolio value is less than $245,000.
  • There needs to be at least 20 different foreign securities in your portfolio. No partial credit is given if portfolio contains less than 20 stocks.
  • Weighted portfolio Beta needs to be as close to 1 (one) as possible. Partial credit is given for portfolio betas that are not exactly 1.
  • Grading:

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 10% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 10 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 8 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 6 points to any ONE of your exams.

     

     


    Case Study (FIN-325): Using Derivatives to Hedge International Portfolio Risk (Advanced)

    Category : Archieve

    Case Study (FIN-325): Using Derivatives to Hedge International Portfolio Risk (Advanced)

    Educational purposes only…

    PLEASE NOTE: You need a new username for this case study.

    PLEASE NOTE: This case study is at an advanced level and may become quite frustrating.

    Purpose

  • To review and apply the theory of hedging and international diversification to real life examples,
  • To hedge an internationally diversified portfolio through derivatives,
  • To conduct a detailed research about international financial securities as well as hedging methods.
  •  

    Rules

  • Trading Game is used for the portfolio formations.
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • If you submit this case study before the deadline AND you receive a grade of C or better then you can resubmit this case study for a second time (with a new username). There is no third resubmission.
  • You need to have a new username for the second submission.
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You can use Stata (completely voluntary) to trade or check your work.
  •  

    Directions: Long Positions

  • (5 points) Maximum allowed funds (based on cost) for long positions is $250,000.
  • (5 points) Minimum allowed funds (based on cost) for long positions is $245,000.
  • Please make sure you have long trade positions in each of the following:
    • (10 points) at least 10 different country index funds (ETFs, i.e. BKF)
    • (10 points) at least 4 Foreign currency funds (ETFs, i.e. FXE)
    • (5 points) at least 1 foreign Treasury bonds (ETF, i.e. WIP)
  •  

    Directions: Short Positions

  • (5 points) Maximum allowed funds (based on cost) for short positions is $250,000.
  • (5 points) Minimum allowed funds (based on cost) for short positions is $245,000.
  • Please make sure you have short trade positions in each of the following:
    • (10 points) at least 10 different country index funds (ETFs, i.e. BKF)
    • (10 points) at least 4 Foreign currency funds (ETFs, i.e. FXE)
    • (5 points) at least 1 foreign Treasury bonds (ETF, i.e. WIP)
  •  

    Grading

  • You need to hedge both long and short positions.
  • COST OF OPTIONS IS CONSIDERED LOSS.
  • Cost of options is not part of your invested portfolio.
  • Choice of hedge is yours.
  • Your grade will depend on your success of hedging.
  • Point of the case study is to eliminate the risk of loss entirely.
  • For each $2,000 loss on the long positions, it will cost you 10 penalty points.
  • For each $2,000 loss on the short positions, it will cost you 10 penalty points.
  • Profits will receive no bonus, extra credit etc.
  • Grading towards course grade

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 20% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 20 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 16 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 12 points to any ONE of your exams.

     


    Case Study (FIN-325): International Portfolio Competition

    Category : Archieve

    Case Study (FIN-325): International Portfolio Competition

    Educational purposes only…

    PLEASE NOTE: You need a new username for this case study.

    Purpose

  • Form an international financial securities portfolio with the purpose of making profit.
  • Review and apply the risk and return theory
  • Review and apply the international portfolio management and diversification theory
  •  

    Rules

  • Trading Game is used for the portfolio formations.
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • You can only trade foreign securities (no US stocks, US ETFs, US ADRs, US Options etc.) Foreign securities have suffix.
  • You can only have long positions (no short positions)
  • You cannot day trade. You cannot close positions. ONLY “buy to open” orders will be evaluated. All other orders will be disregarded.
  • If you make a mistake, you need to reset your entire portfolio. ONLY “buy to open” orders will be evaluated.
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You CANNOT use Stata to trade for this assignment. If a stock is not reserved, it will not be included in your portfolio. Stata trades are not reserved.
  •  

    Directions:

  • Maximum allowed funds (based on cost) for the stocks is US$500,000. No partial credit is given if portfolio value is more than US$500,000.
  • Minimum allowed funds (based on cost) for the stocks is US$450,000. No partial credit is given if portfolio value is less than US$450,000.
  • There needs to be at least 20 different foreign securities in your portfolio. No partial credit is given if portfolio contains less than 20 foreign securities.
  • This assignment is worth 10 extra credit points that can be added to any of your exams.
  •  

    Grading:

  • Top 3 trades will receive full 100 points.
  • Traders who have more than 5% return will receive full 100 points.
  • Traders who have more than 2.5% (and less than 5%) return will receive 75 points.
  • Traders who have more than 1% (and less than 2.5%) return will receive 50 points.
  • Traders who have completed all requirements but could not achieve any profits will receive 25 points.
  • Grading towards course grade

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 10% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 10 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 8 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 6 points to any ONE of your exams.

     

     


    Case Study (FIN-300): Portfolio competition

    Category : Archieve

    Case Study (FIN-300): Portfolio competition

    Educational purposes only…

    PLEASE NOTE: You need a new username for this case study.

    Purpose

  • Form a financial securities portfolio with the purpose of making profit.
  • Review and apply the risk and return theory
  • Review and apply the portfolio management and diversification theory
  •  

    Rules

  • Trading Game is used for the portfolio formations.
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • You can only trade stocks (no ETFs, ADRs, Options etc.)
  • You can only have long positions (no short positions)
  • You cannot day trade. You cannot close positions. ONLY “buy to open” orders will be evaluated. All other orders will be disregarded.
  • If you make a mistake, you need to reset your entire portfolio. ONLY “buy to open” orders will be evaluated.
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You CANNOT use Stata to trade for this assignment. If a stock is not reserved, it will not be included in your portfolio. Stata trades are not reserved.
  •  

    Directions:

  • Maximum allowed funds (based on cost) for the stocks is $500,000. No partial credit is given if portfolio value is more than $500,000.
  • Minimum allowed funds (based on cost) for the stocks is $450,000. No partial credit is given if portfolio value is less than $450,000.
  • There needs to be at least 20 different stocks in your portfolio. No partial credit is given if portfolio contains less than 20 stocks.
  • This assignment is worth 10 extra credit points that can be added to any of your exams.
  •  

    Grading:

  • Top 3 trades will receive full 100 points.
  • Traders who have more than 5% return will receive full 100 points.
  • Traders who have more than 2.5% (and less than 5%) return will receive 75 points.
  • Traders who have more than 1% (and less than 2.5%) return will receive 50 points.
  • Traders who have completed all requirements but could not achieve any profits will receive 25 points.
  • Grading towards course grade

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 10% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 10 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 8 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 6 points to any ONE of your exams.

     

     


    Case Study (FIN-300): Portfolio with target beta

    Category : Archieve

    Case Study (FIN-300): Portfolio with target beta

    Educational purposes only…

    PLEASE NOTE: You need a new username for this case study.

    Purpose

  • Form a financial securities portfolio with a target beta
  • Review and apply the capital asset pricing theory
  • Conduct a detailed research about financial securities as well as financial markets
  •  

    Rules

  • Trading Game is used for the portfolio formations.
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • You need to obtain the Betas for this assignment. Please use the Betas that are provided by Yahoo! Finance. If Beta is not available on Yahoo! Finance, please do not use that security.
  • You can only trade stocks (no ETFs, ADRs etc.)
  • You can only have long positions (no short positions)
  • You need to have balanced weights across your stocks
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You can use Stata (completely voluntary) to trade or check your work.
  •  

    Directions:

  • Maximum allowed funds (based on cost) for the stocks is $250,000. No partial credit is given if portfolio value is more than $250,000.
  • Minimum allowed funds (based on cost) for the stocks is $240,000. No partial credit is given if portfolio value is less than $240,000.
  • There needs to be at least 20 different stocks in your portfolio. No partial credit is given if portfolio contains less than 20 stocks.
  • Weighted portfolio Beta needs to be as close to 1 (one) as possible. Partial credit is given for portfolio betas that are not exactly 1.
  • Grading:

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 10% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 10 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 8 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 6 points to any ONE of your exams.

     

     


    Case Study (FIN-325): Using Derivatives to Hedge International Portfolio Risk

    Category : Archieve

    Case Study (FIN-325): Using Derivatives to Hedge International Portfolio Risk

    Educational purposes only…

    Purpose

  • To review and apply the theory of hedging and international diversification to real life examples,
  • To hedge an internationally diversified portfolio through derivatives,
  • To conduct a detailed research about international financial securities as well as hedging methods.
  •  

    Rules

  • Trading Game is used for the portfolio formations.
  • You need to use one username for the entire case study (i.e. same username for all three sections/portfolios).
  • Your username for this case study must be unique to this case study (i.e. you cannot use a username you already had for other case studies).
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • If you submit this case study before the deadline AND you receive a grade of C or better then you can resubmit this case study for a second time (with a new username). There is no third resubmission.
  • You need to have a new username for the second submission.
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You can use Stata (completely voluntary) to trade or check your work.
  •  

    Directions: Long Positions

  • (5 points) Maximum allowed funds (based on cost) for long positions is $250,000.
  • (5 points) Minimum allowed funds (based on cost) for long positions is $245,000.
  • Please make sure you have long trade positions in each of the following:
    • (10 points) at least 10 different country index funds (ETFs, i.e. BKF)
    • (10 points) at least 4 Foreign currency funds (ETFs, i.e. FXE)
    • (5 points) at least 1 foreign Treasury bonds (ETF, i.e. WIP)
  •  

    Directions: Short Positions

  • (5 points) Maximum allowed funds (based on cost) for short positions is $250,000.
  • (5 points) Minimum allowed funds (based on cost) for short positions is $245,000.
  • Please make sure you have short trade positions in each of the following:
    • (10 points) at least 10 different country index funds (ETFs, i.e. BKF)
    • (10 points) at least 4 Foreign currency funds (ETFs, i.e. FXE)
    • (5 points) at least 1 foreign Treasury bonds (ETF, i.e. WIP)
  •  

    Grading

  • You need to hedge both long and short positions.
  • Cost of options is NOT considered loss.
  • Cost of options is not part of your invested portfolio.
  • Choice of hedge is yours.
  • Your grade will depend on your success of hedging.
  • Point of the case study is to eliminate the risk of loss entirely.
  • For each $2,000 loss on the long positions, it will cost you 10 penalty points.
  • For each $2,000 loss on the short positions, it will cost you 10 penalty points.
  • Profits will receive no bonus, extra credit etc.
  • Grading towards course grade

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 15% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 15 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 12 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 9 points to any ONE of your exams.

     

     


    Case Study (FIN-325): International Portfolio Management

    Category : Archieve

    Case Study (FIN-325): International Portfolio Management

    Educational purposes only…

    Purpose

  • To review and apply the calculations provided with the textbook material to real life examples,
  • To form a diversified international financial securities portfolio,
  • To review and apply the theory of international diversification and hedging,
  • To conduct a detailed research about international financial securities as well as international financial markets.
  •  

    Rules

  • Trading Game is used for the portfolio formations.
  • You need to use one username for the entire case study (i.e. same username for all three sections/portfolios).
  • Your username for this case study must be unique to this case study (i.e. you cannot use a username you already had for other case studies).
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • If you submit this case study before the deadline AND you receive a grade of C or better then you can resubmit this case study for a second time (with a new username). There is no third resubmission.
  • You need to have a new username for the second submission.
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You can use Stata (completely voluntary) to trade or check your work.
  •  

    Directions: Long Stock Positions

  • (5 points) Maximum allowed funds (based on cost) for the long positions is $250,000.
  • (5 points) Minimum allowed funds (based on cost) for the long positions is $240,000.
  • Please include stocks in each of the following currencies;
    • EUR: at least 2 different stocks (2 points).
    • GBP: at least 2 different stocks (2 points).
    • CHF: at least 2 different stocks (2 points).
    • CAD: at least 2 different stocks (2 points).
    • MXN: at least 2 different stocks (2 points).
    • AUD: at least 2 different stocks (2 points).
    • CNY: at least 2 different stocks (2 points).
    • SEK: at least 2 different stocks (2 points).
    • RUB: at least 2 different stocks (2 points).
    • NZD: at least 2 different stocks (2 points).
    • SGD: at least 2 different stocks (2 points).
    • MYR: at least 2 different stocks (2 points).
    • ILS: at least 2 different stocks (2 points).
    • IDR: at least 2 different stocks (2 points).
  • For the following 5 currencies, please make sure that you have at least $10,000 worth of foreign currency exposure and appropriate amount of hedging. Please note that cost of options is not considered as loss. Also, cost of options are not part of your total portfolio value.
    • EUR: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).
    • GBP: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).
    • CHF: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).
    • CAD: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).
    • AUD: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).

     

    Directions: Short Stock Positions

  • Stocks for the short positions must be different than those for long positions.
  • (5 points) Maximum allowed funds (based on cost) for the short positions is $250,000.
  • (5 points) Minimum allowed funds (based on cost) for the short positions is $240,000.
  • Please include stocks in each of the following currencies;
    • EUR: at least 2 different stocks (2 points).
    • GBP: at least 2 different stocks (2 points).
    • CHF: at least 2 different stocks (2 points).
    • CAD: at least 2 different stocks (2 points).
    • MXN: at least 2 different stocks (2 points).
    • AUD: at least 2 different stocks (2 points).
    • CNY: at least 2 different stocks (2 points).
    • SEK: at least 2 different stocks (2 points).
    • RUB: at least 2 different stocks (2 points).
    • NZD: at least 2 different stocks (2 points).
    • SGD: at least 2 different stocks (2 points).
    • MYR: at least 2 different stocks (2 points).
    • ILS: at least 2 different stocks (2 points).
    • IDR: at least 2 different stocks (2 points).
  • For the following 5 currencies, please make sure that you have at least $10,000 worth of foreign currency exposure and appropriate amount of hedging. Please note that cost of options is not considered as loss. Also, cost of options are not part of your total portfolio value.
    • EUR: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).
    • GBP: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).
    • CHF: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).
    • CAD: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).
    • AUD: at least $10,000 worth of foreign currency exposure (1 point) appropriate amount of hedging (5 points).

    Grading:

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 15% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 15 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 12 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 9 points to any ONE of your exams.

     

     


    Case Study (FIN-300): Financial Securities and Markets

    Category : Archieve

    Case Study (FIN-300): Financial Securities and Markets

    Educational purposes only…

    Purpose

  • Form a financial securities portfolio with diverse securities
  • Review and apply the theory of diversification
  • Conduct a detailed research about financial securities as well as financial markets.
  •  

    Rules

  • Trading Game is used for the portfolio formations.
  • You need to use one username for the entire case study (i.e. same username for all three sections/portfolios).
  • Your username for this case study must be unique to this case study (i.e. you cannot use a username you already had for other case studies).
  • Please note that the Trading Game uses Yahoo! Finance for all financial figures, financial statements, historical prices, beta, symbols, ticker codes, fund categories, ETF categories, options, futures, commodities, security names, countries and all other information pertaining to this case study.
  • If you submit this case study before the deadline AND you receive a grade of C or better then you can resubmit this case study for a second time (with a new username). There is no third resubmission.
  • You need to have a new username for the second submission.
  • Once you trade a security, it is reserved. It cannot be traded by anybody else.
  • You need to let me know when you are done so that I can grade your work.
  • All work will be graded immediately after the deadline. Trading Game will not allow you to trade after the deadline.
  • You can use Stata (completely voluntary) to trade or check your work.
  •  

    Directions: Stocks

  • (5 points) Maximum allowed funds (based on cost) for the stocks is $250,000.
  • (5 points) Minimum allowed funds (based on cost) for the stocks is $245,000.
  • (7.5 points) You need to have at least 20 different stocks in your portfolio.
  • (7.5 points) You need to have at least five different industries.
  • (7.5 points) You need to have at least three different US markets.
  • (7.5 points) You need to have at least five different currencies (other than US dollars).
  •  

    Directions: Mutual Funds and ETFs

  • (5 points) Maximum allowed funds (based on cost) for the mutual funds and ETFs is $250,000.
  • (5 points) Minimum allowed funds (based on cost) for the mutual funds and ETFs is $245,000.
  • (5 points) You need to have at least 10 different ETFs in your portfolio.
  • (5 points) You need to have at least 10 different ETF categories in your portfolio.
  • (10 points) You need to have at least 10 different mutual funds in your portfolio.
  •  

    Directions: Options

  • (15 points) For 5 of the stocks in your portfolio, you need to have 1 Call Option for each.
  • (15 points) For 5 of the stocks in your portfolio, you need to have 1 Put Option for each.
  • Grading:

    THIS ASSIGNMENT IS COMPLETELY VOLUNTARY.
    THIS ASSIGNMENT IS NOT PART OF OUR REQUIRED COURSE CONTENT.
    This assignment has a total of 100 points. 10% of these points can be added to any ONE of the exams.
    For instance #1: Let’s assume you received 100 on this assignment. Then, you can add 10 points to any ONE of your exams.
    For instance #2: Let’s assume you received 80 on this assignment. Then, you can add 8 points to any ONE of your exams.
    For instance #3: Let’s assume you received 60 on this assignment. Then, you can add 6 points to any ONE of your exams.