Stocktrak - investment planning

Report on StockTrak Portfolio using Investment Policy Statement

You have managed a $250,000 retirement portfolio for the past eight weeks, now it is time to provide a progress report. In this report you will need to provide the following information:

Portfolio Balance as of the end of the simulation period.

Rate of return for this eight-week period of time.

Compare this rate of return to your IPS goal, describe why the result is higher or lower than goal.

Compare the rate of return to your benchmark and describe why the result is higher or lower than the benchmark you selected.

Asset Allocation within the portfolio (what mix of stocks, bonds, and cash did you have?)

How you selected the items to be included in your portfolio.

Risk assessment of your portfolio. Pick one stock in the portfolio and find its beta and analyze if the stock actually behaved as the CAPM would have predicted. (Use 12% for market return, and 3% for risk free rate of return)

Pick one stock and find the intrinsic value of the stock using the constant growth dividend discount model (calculate EPS growth rate as an average of the past three years, use 12% as required rate of return). If the company does not pay dividends use EPS as the dividend.

Reflection – how did having an Investment policy statement impact you during the simulation? Analyze how well you were able to stay within the guidelines set forth by the IPS. If you had to do a similar assignment again in the future, what would you do differently next time? Did having an IPS make the simulation harder, easier, or have no effect? Do you think Investment Policy Statements are useful? If you do, how are they useful, if you don’t believe they are helpful, why are they not helpful?