management firm

THE SITUATION: You are a Research Analyst working for a top portfolio management firm, “UMUC Portfolio Management” (in no way affiliated with the University of
Maryland University College). A high-net-worth client has approached your firm with the objective of finding an analyst qualified to manage their large portfolio. Your
firm has selected several of its analysts to develop test portfolios in order identify the best person to manage the portfolio of this rich client. You have been
selected by your firm to develop a 5-week trial portfolio to present to the client (and class). Because of the importance of this client (and their potentially large
investment) your fee for demonstrating superior portfolio selection and management skill will be substantial. The analyst with the best report will become the
portfolio manager for this high-net-worth client’s portfolio (valued at over $100 million). Your portfolio management report and presentation will be submitted
directly to your firm’s high-net-worth client with the approval of your firm’s Board of Directors. The success of your recommendations will determine the success of
your firm in landing this large investor. (It is expected that your portfolio recommendations will not be the same as those reached by other analysts). You should do a
market wide financial evaluation to determine the current situation, best investment course, appropriate asset allocation for this important client.

USE THE P5- WRITTEN REPORT DRAFT ASSIGNMENT FOLDER FOR ALL WEEK FIVE DELIVERABLES

STEP ONE: Update securities prices daily. Prepare an Excel Spreadsheet Investment analysis of Investment Returns. Submit the Investment Returns Analysis to the P5-
Written Report Draft Assignment Folder.
STEP TWO: You have been given another $100,000 for the demonstration Portfolio. You are to purchase five (5) Futures contracts at the beginning of the week. (Note: It
is recommended that you use CME.com for Futures Information). Please keep in mind that you do not have the luxury of trading or selling and/or buying securities during
your portfolio holding period.
• After you determine your initial portfolio you must buy the portfolio using the CBOE Virtual Trade Tool (http://www.cboe.com/tradtool/virtualtrade.aspx). The
commission costs per trade (using CBOE Virtual Trade) are $9.95/trade for stocks and ETFs and $14.95/trade for options.
• The securities you choose for your portfolio can be selected from any traded securities that are available on CBOE Virtual Trading.

STEP THREE: The assignment for the fifth week week is to make your first futures purchases using the CBOE Virtual Trade Tool
(http://www.cboe.com/tradtool/virtualtrade.aspx). What did you purchase and how does it relate to the investment policies and strategies statement you developed for
Homework #1? Did you modify the investment policies and strategies? If you changed your investment policies and procedures what exactly did you update? If you revised
your investment strategies did you inform the client?
• Please submit your Homework #5 in MS Word format with the following file name: LastNameFirstInitial_Homework05.docx. For example, if you name is John Smith,
the file name of your Answer Sheet should be SmithJ_Homework05.docx.
• Your futures purchase strategy should be 1-2 pages (300-600 words), with at least three references. By the due date, submit Homework #5 to your P5- Assignment
Folder.

STEP FOUR: Complete a Draft Written Portfolio Analysis Report of the Portfolio Management Project. The Portfolio Management Project report is organized as an
individual case study exercise. You will select a portfolio to study. This report is 16 to 20 pages double-spaced using APA formatting, with appropriate references.
There should be an abstract or executive summary (200 to 300 words). The Written Portfolio Analysis Report will be evaluated on the basis of:

Portfolio Construction and Management
• Establish objectives for construction and management of a portfolio, policy statement, strategy, asset allocation, industry analysis.
Implementation and application of specific and well-articulated portfolio management strategies; portfolio design, security selection criterion, initial and final
Portfolio.
• Show time series record including, price, value, cash, return, cumulative wealth, and profit and loss table with discussion
• Development and utilization of investment management tools: including online stock screeners, research tools and information, correlation, etc. Demonstrate
understanding of concepts.

Portfolio Management Evaluation and Assessment
• Provide explanation of the linkages between investment strategies and assets selected for inclusion in the portfolio (i.e., Why were specific securities
purchased?)
• Risk return analysis; statistics table with geometric mean, standard deviation, beta, percent systematic risk, R2, etc. Including CML, SML and correlation
matrix with clear explanation
• Compare investment returns to market benchmark; Explain differences between securities, portfolio, index; including terminal wealth, performance measures
statistics, Sharpe, Treynor, and alpha, including formulas and discussion.

Quantitative Analysis and Critical Thinking
• Accurate computation of statistics, use of quantitative methods, utilizing professional analysis and critical thinking; including geometric mean, terminal
wealth, standard deviation, Beta, value at risk, information ratio, etc.

Presentation of Paper and Writing
• Organization, format and presentation of paper including title page, executive summary, table of contents, introduction, body, etc.
• Writing, grammar, spelling & punctuation; methodology, explanation of all tables and figures
• Use of tables, figures and other graphics with labeling to summarize and support analysis, quality of charts & tables.
• Logical and smooth flowing transitions and relationships among sections of the written report, with conclusions and recommendations.

Research Approach and Use of Professional Sources of Information and Data
• Research sources and significance of research information and data, use of APA citation and URL links

STEP FIVE: Post your MS Word formatted Portfolio Management Project Draft in Discussions, Portfolio Management Project. Use the following file name: if your name is
John Smith, the file name of your written paper should be SmithJ_PortfolioMgmtDraft05.docx. Also post your written draft in the P5B-Portfolio Management Project
Written Report Draft Assignment Folder.

ADDITIONAL INFORMATION
Video
“Asset Allocation: A Strategy for Life”
https://www.youtube.com/watch?v=RVzUGKuXbpA

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