Stock portfolio

Stock portfolio

Making a report to your investment committee that discusses and summarizes the performance of your stock portfolio.  Use closing prices as of Thursday, November 29, to calculate your returns.

Portfolio is attached

Portfolio initial value: 1,000,000

Brought in date: Sep.7

Sell date: Nov. 29

Calculation

1. 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 [(MV_end – MV_beginning + DIV) / MV_beginning] and the buy-and-hold return on your portfolio.
2. 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.
3. Calculate the market value of
   1. 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.
   2. 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.
4. Plot the daily market value of your portfolio and the daily market value of the S&P 500 using your calculations in #3.
5. Using the market values you calculated in #3, calculate the daily returns (percent) for
   1. your portfolio
   2. The S&P 500 index portfolio.
6. Using your calculations in #5, calculate
   1. The average daily return and the standard deviation of daily returns for both the S&P 500 index and your portfolio.
   2. 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.

Preparing a relatively short report for your investment committee. This should be financial report!  These questions are intended to provide guidance.

1. Introduction
2. 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).
3. 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.
4. 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.
5. 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.