Financial Markets

Final Assessment: Make effective investments in mutual funds, index funds and ETFs

Written assignment (case, essay) Activity brief

BCO224 · Financial Markets Online campus

Professor: Dr. Christina Nicolas | [email protected]

Description 1. Assume you are an investment advisor. Your client is unsure what the main benefits and reasons for investing in a Mutual Fund or an ETFs are o Explain the main differences and similarities between each other o Explain what the main advantage and disadvantage of investing in

mutual funds or ETFs are o Explain the main difference between active and passive management

2. Go to https://www.morningstar.com

o What information does the Morningstar Style Box® provide? o Morningstar assigns a Rating to each Mutual Fund. What are the

criteria they use to assign this rating? o Use the information provided above (style box and ratings) to choose 5

different mutual funds/ETFs (5 funds/ETFs per each portfolio) to prepare 3 portfolios for 3 different types of investors:

1. Aggressive 2. Moderate 3. Conservative

o In half a page for each portfolio, explain: 1. The rationale behind choosing the given funds/ETFs per each

portfolio 2. The criteria chosen to build each portfolio 3. Follow up the prices for all 3 portfolios for a week. Calculate

the return for each portfolio at the end of the week.

Explain your results.

Format This activity must meet the following formatting requirements:

• Main document please uploaded in pdf format.

• It is mandatory to submit an EXCEL file where you explain the different calculations you made.

• To that effect, please find 2 tabs in Turnitin submission point.

• Calculation results HAVE TO be explained and the calculation steps displayed.

• Font size 12

• Double-spaced

• Harvard Referencing System

Due date Date: 10th May 2021 at 14.00h CEST

Weight towards final grade

This activity has a weight of 60% towards the final grade.

Goal(s) The aim is that the student understands the advantages of mutual funds and how they can be tailored to meet the investor’s risks profile.

Assessment criteria

See the rubric on the next page.

Learning outcomes

• Demonstrate a deep understanding of the role of financial markets and financial institutions

• Understand the primary classes of mutual funds available to investors and the benefits of different investment funds

• Understanding NAV calculations

Rubric: written assignment

Criteria Accomplished

90 – 100%

Proficient

80 – 89%

Borderline

70 – 79%

Fail

< 70%

Understanding (30%)

Student selects all key concepts, demonstrating an excellent understanding of the reading material and task.

Student selects some key concepts, demonstrating a good understanding of the reading material and task.

Student selects a few key concepts, demonstrating a fair understanding of the reading material and task although some concepts might be missing.

Student fails to select key concepts, demonstrating insufficient understanding of the reading material or task

Calculation (20%)

Student demonstrates excellent ability to calculate and understand all key formulas & exercises.

Student demonstrates good ability to calculate and understand all key formulas &exercises.

Student demonstrates fair ability to calculate and understand all key formulas & exercises.

Student demonstrates insufficient ability to calculate and understand all key formulas & exercises.

Analysis (40%)

Student demonstrates an excellent ability to interpret statistics and the calculation results, as well as a highly critic approach.

Student demonstrates a good ability to interpret statistics and the calculation results, as well as a good critic approach.

Student demonstrates a fair ability to interpret statistics and the calculation results, as well as a fair critic approach.

Student demonstrates an insufficient ability to interpret statistics and the calculation results, as well as an insufficient critic approach.

Communication (10%)

Student communicates their ideas extremely clearly and concisely, in writing and orally.

Student communicates their ideas clearly and concisely, in writing and in public.

Student communicates their ideas with some clarity and concision, in writing and to some extent, in public.

Student fails to communicate their ideas clearly and concisely, in writing and/ or in public.