MSB002-6 Financial Markets and Investments 2 Coursework – Case Study Assignment Brief AY25-26

Permitted

Use of Generative AI (GenAI)

 Please refer this link, on BREO for more detailed information on AI.

 You are may use Generative AI tools to aid your research and report writing, under the following conditions:

• Clearly indicate where and how GenAI tools were used, demonstrating your understanding of these tools.
• Critically evaluate all AI-generated content and supplement it with your own analysis and insights. This approach ensures that you are actively engaging with the material rather than passively relying on AI outputs.
• Adhere to academic integrity guidelines and properly cite any AI-generated content or ideas derived from these tools.

The assignment will be assessed based on the learning process rather than solely on the end product. This includes how effectively you incorporate AI tools into your research and analysis, your ability to critically evaluate AI-generated content, and your engagement with the subject matter. The goal is to enhance your learning experience and develop your critical thinking and analytical skills.

Not permitted

Self-plagiarism, a student copying material from another assignment they have submitted, is generally not considered as an offence unless this is explicitly forbidden in the assignment brief.  Self plagiarism should be avoided. Students are NOT allowed to use or submit their previously prepared report for this assignment.

Every class starting  14/10/2025

https://breo.beds.ac.uk/ultra/courses/_62010239_1/outline/file/_10351508_1

This assessment is primarily on applied portfolio diversification using real data sets from S&P 500 companies. You are required to download and assess the last five years of daily time series of stock prices data and trading volume for two listed companies from preferably diverse and less-correlated industries for an efficient analysis.

 The U.S. 10-year Treasury Bill is currently 4.21%.

1. Provide rationale for selection of your two companies from S&P 500 with special reference to their respective industries, size, market share, market capitalization, functionality and other relevant company-specific characteristics and traits. (10 marks)

2. Provide a graphical representation of daily time series data with trading volume and calculate the key summary statistics for each company with a critical and comprehensive comparison. Calculate the expected annual return on each company using the annualized returns and the Single-Index Model. (30 marks)

3.  Calculate the optimum investment weights for each company providing the mean-variance efficient portfolio and graphically present the combination of risk-return characteristics of portfolios with different weights in each company. i.e., the efficient frontier. Briefly interpret your applied findings for a clearer and enhanced understanding in the domain. (40 marks)

4. Calculate the performance measurement metrics in terms of the Sharpe ratio and Treynor ratio for each company and the mean-variance efficient portfolio; and explain in which company or the portfolio investors should invest, and why; with special reference to each performance criterion. (20 marks) TOTAL [100 MARKS]

The Unit Information Form states the Threshold Expectations that inform both you and markers what is the minimum needed to be demonstrated to pass the assessment. They should, therefore, answer the question "What do I need to do pass?”. During the assessment introductory session, you should be given the opportunity to check your understanding of the threshold statements and what you need to do to surpass them.

The assessment marking criteria listed below show how your work is assessed. The assessment criteria are informed by the unit’s learning outcomes and the assessment task. Carefully reading the assessment criteria should help you understand the aspects that will be used to judge your progress and achievement of the learning outcomes and offer guidance on “how do I achieve a good grade”.

In order to pass Assessment 2, you will need to:

• Use real world cases and financial data to demonstrate the ability to solve the complicated problem of generating optimal portfolios that achieve both a reduced risk and a required return
• Demonstrate a clear application of your skills to the contemporary financial environment and make sound and informed judgments and decisions.
• Collect data of financial assets from Reuters Eikon or Datastream (or other sources) and critically evaluate the performance of financial assets based on financial analysis and statistical techniques, explaining the implication of these variables.

In order to achieve a good grade, you will need to:

• Develop a consistent and logical argument that shows deep analysis and clarity of thought. It could be based on an excellent grasp of financial markets and portfolio management e.g. liquidity, risk management, investment decisions, interest rates.
• Develop and present a good synthesis of relevant theoretical analyses and examples
• Demonstrate a comprehensive analysis of recent, relevant literature
• Think carefully about and reflect on the topic with some practical examples
• Ensure that all arguments presented are cogent and coherent
• Demonstrate a strong awareness of academic theories and apply that knowledge fully
• Present your answers to a high standard of academic writing and referencing