Portfolio:
Stock
Apple number of shares: 2000
Exxon Mobile number of shares: 1000
Wendy's number of shares: 1000
Johnson&Johnson: number of shares: 1000
JPMorgan number of shares: 1000
For this Part, you will be making a report to your investment committee that discusses and summarizes the
performance of your stock portfolio. Use closing prices as of Thursday of Week 13, April 9, to calculate your
returns. What is the final market value of your portfolio (including dividends received and added to non-interest
earning cash)? If the final market value of your portfolio is less than $1,000,000, your portfolio lost money.
Provide a graph of the daily stock prices (high, low, and closing) for each of your stocks.
Provide a graph of the value of your portfolio and the value of the closing S&P 500 if $1,000,000 were invested in that initially. This is the normalized value. By normalized, you have scaled the S&P 500 closing prices so that
its price on the first day ($1,000,000) is the same as the portfolio’s closing price on that first day.
In the final section of your report, recommend for or against the inclusion of each of these stocks in the portfolio and defend your recommendation. Use the information you have obtained in Part 1 Deliverable 2 to support
your argument.
Calculations: Use the closing price of your stocks on Thursday of Week 13, April 9, to calculate your returns.
Report the “purchase” and “sale” price of your stocks from the beginning and end of the semester along with any dividends you might have received. Calculate the buy-and-hold return of each stock [(MVend –
MVbeginning + DIV) / MVbeginning] and the buy-and-hold return on your portfolio.
Determine the final market value of your portfolio (including dividends received). If the final market value of
your portfolio is less than $1,000,000, your investment lost money.
Calculate the market value of
Your portfolio for each day (including cash). I suggest that you do this by adding up the daily closing market values of your assets held and the cash you hold, including the total dividends received up to date.
The S&P 500 index portfolio over this same period assuming you keep the same amount in cash. We are using
the S&P 500 index as our proxy for the market.
Plot the daily market value of your portfolio and the daily market value of the S&P 500 using your calculations
in #3.
Using the market values you calculated in #3, calculate the daily returns (percent) for
your portfolio
The S&P 500 index portfolio.
Using your calculations in #5, calculate
The average daily return and the standard deviation of daily returns for both the S&P 500 index and your
portfolio.
your portfolio’s beta by calculating the covariance of your portfolio’s daily returns with the S&P 500’s daily
returns and dividing that by the variance of the S&P 500.
Write-up: Assume that you are preparing a relatively short report (maximum of 10 pages double-spaced) for your investment committee. You will be graded on the quality of your writing as well as the quality of your analysis. Do not simply answer the following questions – this should be financial report! These questions are
intended to provide guidance.
Introduction
Comment on the individual and portfolio returns and on any information/events (market-wide or firm-specific)
that may have contributed to the performance of your stocks. Describe and explain any trades you made.
(Suggested length: a short, concise paragraph for each stock).
From your calculations, if you held the S&P 500 instead of your stocks, how much money would you have ended up with? Would you have been better or worse off to hold the index? Analyze the reasons for any
differences.
Based on your calculations for standard deviation and beta, how risky was your portfolio compared to the index? Again, analyze the causes of the differences.
Finally, what are your plans going forward? That is, if this class continued and you had the chance to alter your
portfolio holdings now, would you choose to sell any of your stocks or would you want to keep holding them?
What will you tell the investment committee? Be explicit