1) Each position (buy) you take in an asset must be a minimum of 5% and a maximum of 10% of your total portfolio assets.
(2) Cash must NOT exceed 20% of your portfolio at any time. You MUST be investing, not sitting on the sidelines.
By the end of Week One, your client (me) MUST have a 2-3 page double-spaced paper explaining your philosophy, process, and the initial positions and allocations you have chosen for your portfolio (portfolio statement), following the two rules above.
Here are your portfolio options that I have set up for you:
Starting balance for players:
Credit Interest Rate:
Leverage Debt Interest Rate:
Minimum Stock Price:
Maximum Stock Price:
Trading Volume Limit:
The final project will be due no later than midnight on the final day of class and is worth 200 points. Your paper and portfolio will be measured on the following three elements by your client (me, again):
(1) Absolute return – the total dollar amount that your portfolio increased over the trading period and
(2) Risk-adjusted return – the return on the portfolio taking into account the level of risk you assumed as measured by the Sharpe Ratio.
(3) A 3-4 page, double-spaced paper about your experience with this game that addresses at least the following questions:
a) Which positions exceeded your expectations and what conditions caused this?
b) Which positions underperformed for you and what factors created the performance gap?
c) What were the key things you learned from your Virtual Stock Exchange simulation and how will it influence your personal investing in the future?