financial market

a. The challenge ends on May 27th.

b. You have an initial $1,000,000 to invest.

c. You may buy/sell stocks, bonds, and mutual funds. You may also short stocks.

d. Each trade costs you $10 in brokerage fees.

e. You may day trade.

2. Challenge Perspective

a. Maintain a short-term perspective. This is a short-term project.

b. Your goal is to “beat the market” performance. The market performance is measured by the return on the S&P 500 as a benchmark portfolio over your trading period. You can track the S&P 500 on any financial news web site.

c. Take profit or sell losers quickly to free up funds for new trades.

3. Trading Basics

· In this project, you must place “buy” and “sell” orders through a broker. Stock-Trak is your broker.

· To execute a trade, the broker must receive an order specification which includes

· The name of the security

· Whether to buy or sell

· Order size

· Order type

· Time limit of the order

· Name of the security: enter the ticker symbol

· Buy or sell: hmmmmm…

· Order size: how many shares/bonds do you want to buy or sell?

· Order type

· Market order: an immediate transaction at the best available price

· Limit order: you name the price and the time limit for the transaction

· Stop loss order: set up a price that is a lower acceptable bound. For this type of order, where the “stop sell” price must be below the market price when the order is placed. Example: if a stock currently trades for $25, you may place a stop sell order for below $25, say, $19. If this lower price occurs, your broker sells your shares.

· Time limit of the order

· Market order: you select an immediate transaction at the available price

· Limit order: “fill or kill” or “good until canceled”

· Trading hours are M-F, 9:30-4:00, Eastern time

· Bond and mutual fund trades settle after the close of each trading day

· The Internet has lots of free advice, data, and other information available. Use any and all information to make rational investment decisions.

4. Presentation Requirements

Presentation Due by June 30th. Your presentation will include the following:

(1) Provide a description of your investment successes and failures providing details of important trades or strategies—what worked well for you and was this based on any strategy, and what didn’t work so well for you.

(2) Reflect on your learning experiences in this project. What did you learn about trading securities? Provide substantive reflection on your experience with this project.

(3) Include your trading log and performance graph (all available on StockTrak).

(4) Length of presentation will be approximately 5-7 minutes.

(5) One presentation per group.

Sweetener: The top 3 traders out of all 6 groups will earn extra credit as follows: 10 points for the top trader, 8 points for second place, and the 3rd highest performing trader earns 6 points. Failure to meet any of the deadlines will disqualify you from potentially earning extra credit.