Assignment.docx

Q) Suppose you have Rs. 10,00,000 to invest in stock market. Form different portfolio individually (You need to purchase at least 10 stocks that are traded in Nepal Stock Exchange for forming a portfolio). You are required to compute daily return on each stock included in your portfolio. Also compare your average portfolio return with NEPSE average return for your study period. •

Note while calculating daily return use 7 days trading price. (Use SPSS or Excel program as per your convenience).

•

Prepare a report and submit.

Solution: First of all, let’s calculate average 7 day return from NEPSE index. Date 12-03-19 13-03-19 14-03-19 17-03-19 18-03-19 19-03-19 21-03-19 24-03-19 Total Average HPR

NEPSE Value (in Rs) 1163.26 1150.1 1155.46 1161.45 1153.98 1147.15 1140.6 1134.8

HPR (in %) None -1.13130341 0.466046431 0.518408253 -0.64316157 -0.59186468 -0.57098026 -0.5085043 -2.46136 -0.351623

Therefore, the 7-day average NEPSE index return is -0.351623 %. Note: Formula for HPR is, Holding Period Return (HPR) = (Final value of NEPSE index- Initial Value of NEPSE index)/ Initial Value of NEPSE index*100%

Now, we need to calculate the return from our portfolio. We have Rs. 10 lacs which we need to invest in 10 different listed companies in NEPSE. Our investment portfolio is given below:

S.N

Traded Companies

1 2 3 4 5 6 7 8 9 10 Total

ADBL AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL BHCL

Invested amount (in Rs) 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 1000000

Weights 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1

The portfolio return is calculated as below: Date

Traded Companies

12-Mar19

ADBL AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL BHCL ADBL AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL

13-Mar19

Closing Price of stock (in Rs) 305 80 140 660 193 108 321 398 254 94 301 82 134 631 178 106 349 396 250

HPR (in %)

Portfolio Return (in %) None

-1.31148 -0.62142568 2.5 -4.28571 -4.39394 -7.77202 -1.85185 8.722741 -0.50251 -1.5748

14-Mar19

17-Mar19

18-Mar19

19-Mar19

BHCL ADBL AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL BHCL ADBL AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL BHCL ADBL AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL BHCL ADBL AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL BHCL

98 302 85 137 633 178 106 366 397 252 96 302 84 139 640 180 105 402 401 251 98 301 83 134 660 175 103 422 396 248 96 298 82 135 660 170 104 464 398 246 95

4.255319 0.332226 3.658537 2.238806 0.316957 0 0 4.87106 0.252525 0.8 -2.04082 0 -1.17647 1.459854 1.105845 1.123596 -0.9434 9.836066 1.007557 -0.39683 2.083333 -0.33113 -1.19048 -3.59712 3.125 -2.77778 -1.90476 4.975124 -1.24688 -1.19522 -2.04082 -0.99668 -1.20482 0.746269 0 -2.85714 0.970874 9.952607 0.505051 -0.80645 -1.04167

1.042929478

1.409955807

-0.618405787

0.526804143

21-Mar19

24-Mar19

ADBL

296

-0.67114

AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL BHCL ADBL AKJCL APCL AMBSL AKPL AVHDCL ALBSL ALICL BOKL BHCL

82 131 652 173 103 487 389 244 93 293 79 132 621 167 101 492 381 243 93

0 -2.96296 -1.21212 1.764706 -0.96154 4.956897 -2.26131 -0.81301 -2.10526 -1.01351 -1.55129455 -3.65854 0.763359 -4.7546 -3.46821 -1.94175 1.026694 -2.05656 -0.40984 0 -0.238010485 % -0.034001498 %

Total Average Portfolio Return

-0.426573896

Therefore, the 7-day average portfolio return is -0.034001498 % which is far lesser than 7-day average NEPSE index return which is -0.351623 %.