MAN00143M Stock Investment and Trading Assessment Brief | University of York

Important information

A penalty of five marks will be deducted for late submissions that are made within the first hour after the deadline. Submissions that are more than one hour late but within the first 24 hours of the deadline will incur a penalty of ten marks. After the first 24 hours have passed, ten marks will be deducted for every 24 hours (or part thereof) that the submission is late for a total of 5 days. After 5 days it is treated as a non-submission and given a mark of zero. The consequences of non-submission are serious and can include de-registration from the University. 

If you are unable to complete your open assessment by the submission date indicated above because of Exceptional Circumstances you can apply for an extension. If unforeseeable and exceptional circumstances do occur, you must seek support and provide evidence as soon as possible at the time of the occurrence. Applications must be made before the deadline to be considered. 

Full details of the Exceptional Circumstances Policy and claim form can be found here: https://www.york.ac.uk/students/studying/progress/exceptional-circumstances 

If you submit your open assessment on time but feel that your performance has been affected by Exceptional Circumstances you may submit an Exceptional Circumstances Affecting Assessment claim form by 7 days from the published assessment submission deadline. If you do not submit by the deadline indicated without good reason your claim will not be considered. 

Section B (40 marks)

Answer TWO of the following questions 
All are SC1 SC3 SC4 AG1-4 

1. Your rich uncle lives in the country where you grew up. He has heard you are doing a Finance MSc and asks for your advice. He currently holds a domestic position, valued at the equivalent of US$1m, given by a 20-40-40 portfolio of cash, sovereign and high-grade corporate bonds, and a portfolio of stocks matching the main stock index in his country. He wants to create a more well diversified portfolio by adding positions from international markets, including commodities such as gold, oil, etc. 
   Explain to him the options available and give a sample portfolio. Specific stocks are not required, but where there is a generic asset e.g. T-bills or commodities you should quote the current price and how many your uncle should buy. 
   If your uncle's country has any barriers to international investment, you should describe those and explain how he might overcome them.
2. Define a primary and secondary market for securities and describe how they differ. In what sense is the primary market dependent on the secondary market? Choose one country and describe briefly a recent IPO and a recent seasoned equity offering on the same stock market. Which offering was more risky to invest in, in your opinion, and why? 
3. For each of the following: 
   a) Market order 
   b) Limit buy order 
   c) Short sale 
   d) Stop loss order 
   i) Describe the motivations that would cause an investor to use that order type ii) Give a priced example of such a trade taking place in a real stock that is 
   currently quoted, along with a price chart 
   iii) Explain under what conditions the order may fail to be fulfilled.
4. Describe in detail the investment strategies of Warren Buffett and Philip Fisher. Which areas of their styles are different and which are similar? For each man select TWO stocks that are currently quoted on the US market and explain why that stock would in your opinion be of interest to him. 

Assignment:

Section A (60 marks) 

Answer ALL of the following questions 

All are SC1-5 AG1-5 

You have now experienced several trading days with Finance Lab Pro. Some trades will have been successful but you will have lost money on other stocks. 

Choose ONE of the games you played. If you did not download the market report and trade data report during the seminar they are still available at  globalinvestorsims.com/uk/log-in/ under the user id and password you were given in the seminar. 

Based on the company profiles, the news record, the downloaded records of the 15 stock prices and your buy/sell trades, answer the following questions: 

1. Describe your overall trading strategy: momentum, trading on news, and/or shorting stock? Did you refine your strategy as your experience grew? 
2. Choose THREE of the stocks you held positions in. For each stock: 
   a). Why did you open a position in the stock? What were your criteria for choosing this particular stock and strategy (e.g. momentum or news)? What was the trading strategy/horizon you had in mind? 
   b). When you closed the position, or if you still had an open position at the end of the game, what was your profit or loss?
3. How do you feel your strategy worked overall? With hindsight, would you have done things differently? E.g. could you have reassessed your trading strategy if you had taken into account information on market trends (stock price, volatility, trading volume, performance of peers, market trend, etc.)?
4. Were there any differences of opinion between you and your team partner? Did you resolve them, and if so how?  
5.  What emotions did you feel? Confusion, elation, depression? Relate these to your trading activities. Do you think your emotions affected your trading decisions? Can you identify any of the biases identified by behavioural finance in any of your trading e.g. excessive optimism, hindsight bias or self-attribution bias? How did your emotions and biases work together, e.g. do you think elation at a stock rising contributed to excessive optimism?