Stock Market Game

Stock Market Game Portfolio Simulation Game and Performance Report (Maximum marks-50) The goal will be to beat a passive Rs One Million benchmark portfolio comprising of 50% of the market index, 40% long term government bonds(more than 5 year) and 10% cash. Students will apply the concepts learned in the course to select which bonds and stocks to buy and which to sell, and to evaluate the relative performance of the portfolio. Each student will participate in a portfolio simulation exercise managing Rs One Million. You can invest in any exchange NSE, BSE, a series of government and corporate bonds Investment teams can buy on margin and sell securities short. The requirements for this component of the grade are: 1. Prepare a Fund Prospectus. This statement should be in the form of a one-page, brochure or one-page "specification sheet." It should describe the investment style, restrictions on certain asset classes, name (or names) of investment manager (or managers), benchmark index for performance assessment, expected turnover activity and anything else a potential investor might expect. .You may change your portfolio as often as you wish, but every transaction costs money (incorporate charges as per charges schedule of www.icicidirect.com).You should remain fully invested. Make sure to invest at least in 10 stocks and atleast 40% of your portfolio in a single asset class. Keep track of your portfolio's performance at least twice a week. A note on bonds If you want to invest a certain amount in particular bonds, you need to know the price. 2. Each individual will prepare a final performance report that (1) tracks the weekto-week performance of their portfolio, (2) analyzes the macroeconomic, financial market and stock-specific news events that may have affected the risk and return performance of their portfolios, and (3) evaluates statistically their relative and absolute performance using various tools and techniques. Report: Use of a spreadsheet program such as Excel is recommended. Among other things, the final report should contain: 1.For

each security,  price level and change (performance) for the time period between February 25,2009 and March 24,2009  a measure of historical return. At least monthly return of last 2 years.  a measure of the security's risk

2.For

the whole portfolio, your goal is risk analysis and performance analysis:  Estimate the degree of diversification of your portfolio, using the tools of portfolio diversification.  Find the portfolio beta  Find the portfolio expected return, using the T-bill rate as the riskfree rate and the market return  Measure the portfolio's excess return: the difference between the actual and the expected.  Measure performance relative to the benchmark portfolio  Use the Sharpe and Treynor measures. You'll need the beta, average return and standard deviation of your portfolio and of the benchmark. Note that your grade is not only related to the investment performance, but on the quality of the analysis. The report will be no more than ten pages long (double-spaced, singlesided, 1-inch margin), not including various exhibits, figures and graphs to support the analysis (maximum 20 pages). Please do not hand in reams of computer output. Factors such as clarity and conciseness will be considered heavily in grading your work. In particular, explain carefully any technical material that you used. Always give a bottom line to your findings. IMPORTANT RULES AND REGULATIONS 1. Current and Real-time prices of bonds and stocks need to be considered for your portfolio. Data limitations should be discussed before being made an inclusive part of the course. 2. The final report is to be submitted in hard copy form on March 25, 2009.There would be a viva on submission. 3. The weekly updated portfolio has to be sent to the instructor latest by every Saturday, starting from this week and failure to do the same will lead to penalty of marks. 4. More than two late or non-submissions of weekly reports will lead to your final report not being evaluated at all. 5. Copied portfolios and reports will not be evaluated.