This assessment item weights 10% of your total mark.
Due date: 10th June 2013, 5 p.m.
The purpose of the project is to familiarise students with the real-world of finance, to help students understand financial information, the financial activity of multinational firms and the performance of their share prices. The project will progress along with the semester topics.
The project will be based on an online simulated game platform provided by Investopedia.com using real time financial information. Each group will set up an investment account with Investopedia with an initial virtual fund of $100,000. To form the portfolio, each group will invest the allocated fund in shares of at least TWO listed multinational firms. The portfolio will be expanded with derivative products in later weeks of the semester. All portfolio-related transactions will automatically be recorded online. The final investment report can include ONLY transactions that have been recorded online by the system.
The TOP THREE ranked groups in terms of profit will be awarded with a BONUS mark of 2% (out of 10%).
A printed copy of the investment report is to be submitted to the Faculty’s assignment box on the due date. Submission via Turnitin is NOT required for this assessment task. The answer should reflect the students’ own effort and be free from plagiarism.
Step by step instructions for JOINING THE GAME:
1. Go to http://www.investopedia.com
2. Create a new account (You can choose to use your email address or a display name as your username. Please set a password for your account. This should be your group account that could easily be accessed by all members of your group.)
3. Click on “Simulator” and in the drop menu bar, please choose “Games”.
4. You will need to be logged in before you join the game.
5. Choose “Join a game”
6. This is a private name so you will need to search for the game name to find it. Please search for the name of the game as “IBU5MFN”. When the game appears in the search result, click it and type in the game password as requested. The game password is “IBU5MFN” (case sensitive).
7. Once you have already joined the game, you can start trading.
8. The game rules are as follows:
a. Starting cash: $100,000
b. Trading rules: Stocks and options are permitted, no margin trading, no short selling.
c. Start date: 1 Mar 2013 – End date: 31 May 2013.
d. Commission: $9.99/transaction, $1.75 per contract.
e. Late entry is allowed.
Step by step instructions for THE PROJECT ACTIVITY:
Company selection + shares portfolio formation
Please select at least TWO listed multinational companies for your investment.
How much money is invested in each stock?
Why do you choose these firms to be included in your portfolio?
Major currencies analysis
What currencies affect the business activity of these multinational firms? (check their sales, expenses, financing cash flows…) (please identify at least TWO currencies)
How important are they?
Currency movement forecasting
What is the direction of the movement of these currencies in the near and long term future?
What options and on which stock(s) do you want to include in your portfolio? Why?
FX exposure analysis and risk management report
What is the level of FX exposure of the firms?
Do the firms manage their FX risk effectively? (please see their annual report for risk management policy)
Equity funding report
How much money has been raised by the firms in equity?
What is the book value and market