finance and accounting investment assignment

Portsmouth Business School BA Accounting BA Accounting with Finance BA Accountancy & Financial Management BA European Business Administration (Germany to UK)

Share Trading Assignment The assignment is due in on Friday 3rd February 2017

Assignment Objectives You are given a notional £100,000 to invest in the UK stock market in shares listed on the FTSE ALL Share index. You need to split your investment 50:50 between two portfolios of shares, one where you selected the shares by technical analysis and the other by fundamental analysis. Your aim is to beat the market with both portfolios. It is important you can demonstrate that you know the difference between these methods. You need to compare and contrast the two portfolios and you need to make explicit reference to EMH in your analysis.

Submission Requirements • You need to submit a 2000 word report on your trades, including full referencing according to

Harvard APA. • Your report needs to be submitted to Turnitin, in addition a hard copy submission to the

Undergraduate centre is required. • An appendix with a spreadsheets of your trades (these should not be submitted to turnitin)

Assignment Requirements • You are given a notional £100,000 to invest in the UK stock market. • You have four months to trade. This means that you are going to have to use short-term

investment strategies. • The aim is for you to try to beat the market. The market is represented by the FTSE ALL Share

Index – if you do not ‘beat the market you will not lose marks, most people will find it impossible to do better than experienced investors. You must calculate the return on the market from your first trade to your last trade in order to determine whether you have beaten the market or not.

• The shares MUST be listed on the FTSE ALL Share. • You are not allowed to use derivatives, such as options or any short selling. • 50% of your investment must be based upon fundamental analysis and the other 50% on technical

analysis (Based on two theories – no more or less, just TWO). • Each of your portfolios must contain at least 10 shares. • You are allowed to trade as many times as you like.

Portsmouth Business School BA Accounting BA Accounting with Finance BA Accountancy & Financial Management BA European Business Administration (Germany to UK)

Recommended Format Introduction – You need to explain the rational for the assessment, ‘are you able to outperform the market?’ This means a challenge to the EMH. What strategies you used and which if any of your portfolios beat the market.

Method – A discussion of the strategies you used and justification of approach would be useful, making reference to the journal articles that you review. How did you select the companies for your portfolios? You don’t have to give a list of every company and why, it should be in general. The detail should be in the appendix.

Results & Analysis – How did the portfolios perform? Did they beat the market, which was best? Any analysis of your results based on literature reviewed.

Conclusion -

Appendix – Spreadsheet of all of your trades, with notes on why you chose your companies. The spreadsheet needs to have profit and loss for each of your shares and should say your final profit. The spreadsheet needs to take account for trading costs, see below for details.

Sources of Data Share prices, News & Events Yahoo Finance http://uk.finance.yahoo.com/

Morning Star http://companyintelligence.morningstar.com/client/portsmouth you need to access this from the university

The short view is excellent for videos http://www.ft.com/markets/the-short-view, we will discuss some in lectures.

Google Finance https://www.google.co.uk/finance

Bloomberg Financial Database – RB1.08 and Capital IQ Database – RB 2.08 & 2.09 We will be having classes on this in week 5. This will show you how you can select your companies for the both technical and fundamental analysis.

Portsmouth Business School BA Accounting BA Accounting with Finance BA Accountancy & Financial Management BA European Business Administration (Germany to UK)

Calculating the trading costs

The above information is taken from Yahoo Finance 30th August 2016. So if I were to buy Tesco shares on that day I would have paid 164.15p (ask price) and 164.10p (bid price) if I were selling on the day.

When you purchase shares you must also pay Stamp Duty of 0.5% of the purchase price. There is no Stamp Duty payable when you sell your shares.

You should also assume that you buy your shares online through an Internet broker. Assume that the broker charges you a flat fee of £7.50 per trade, i.e. £7.50 when you buy and £7.50 when you sell.

Example: If I were to buy 1000 shares Tesco shares on 30th September 2016, then

Purchase Cost £1,641.50 1000 x £1.6415(ask price)

Stamp Duty £8.21 £1,641.50 x 0.005

Brokers commission

£7.50 It is always £7.50 regardless of the size

Total costs £1,657.21

Note: You can buy and sell in any amount you like. In our example we bought 1000 shares, but you do not have to buy in round amounts. For example, you could buy 723 shares or any other number you like.

Portsmouth Business School BA Accounting BA Accounting with Finance BA Accountancy & Financial Management BA European Business Administration (Germany to UK)

References Dimson, E., & Marsh, P. (1998). Murphy's Law and Market Anomalies. Social Science Research Network (SSRN) . De Bondt, F. M., & Thaler, R. (1985). Does the Stock Market Overreact? The Journal of Finance , 40 (3), 793-805. Fama, E. (1991). Efficient Capital Markets II. The Journal of Finance , 46 (5). Lakonishok, J., Shleifer, A., & Vishny, R. W. (1994). Contrarian Investment, Extrapolation, and Risk. The Journal of Finance , 49 (5), 1541-1578. Malkiel, B. G. (2003). The Efficient Market Hypothesis and its Critics. The Journal of Economic Perspectives , 17 (1), 59-82. Jegadeesh, N., & Titman, S. (1993, March). Returns to buying winners and selling losers: Implications for stock market efficiency. Journal of Finance 48, 65-91., 48(1), 65-91.

Portsmouth Business School BA Accounting BA Accounting with Finance BA Accountancy & Financial Management BA European Business Administration (Germany to UK)

Students are reminded that the definition of plagiarism includes claiming another person’s work as your own; for example through inadequate references of sources of material used (including internet sources). Direct quotations must be enclosed in quotation marks and referenced. Using other people’s ideas requires a reference even if a direct quote is not included. Marking Criteria –

Failure < 40% 40 – 59% 60– 69% First >70%

Introduction and background to topic

Limited introduction not focused on aims of assignment

Topic well focused but introduction and context incomplete

Introduction clearly expressed; context well defined

As for good pass

Understanding of key issues

Minimal understanding of key issues

Main issues largely identified, but some lack of focus

All issues clearly understood, with some differentiation in terms of importance

Issues clearly understood and differentiated in terms of importance

Evidence of reading and/or choice of appropriate concepts

Little evidence of reading or limited /inappropriate use of module material; unclear theoretical framework; important work uncited or key concepts ignored

Evidence of reading or appropriate use of module material but with some gaps. Literature /concepts adequately but not critically reviewed.

Good critical literature review or well-justified choice of module material. Theoretical framework supports study.

Demonstrates high level of scholarship.

Analysis Largely descriptive; practically no analysis of central issues. Qualitative or quantitative data analysis inaccurate.

Some critical analysis of central issues, but with some inaccuracies.

Relevant and full analysis

Comprehensive and critical analysis of central issues.

Presentation and evaluation of evidence

Some evidence to support arguments but uncritical acceptance of material; poor or incomplete citation; unjustified conclusions.

Appropriate evidence, generally assessed critically; weak interpretation of qualitative aspects; some gaps in linkages between evidence and conclusions.

Full, critical assessment of discriminatingly selected material; some evidence of independent thought

Full, critical assessment of discriminatingly selected material; evidence of independent thought; substantial individual insights evident

Presentation: Structure, clarity, use of grammar, correct spelling

Poor: lack of structure and clarity; grammatical mistakes; inadequate referencing

Reasonably clear presentation; reasonable referencing; few grammatical or spelling mistakes

Demonstrates very good communication skills; accurate referencing; very few/no grammatical or spelling errors

Excellent communication skills; accurate referencing; virtually no errors; scholarly, well- organised treatment of material

Attainment of learning objectives

Attainment of few/none of the relevant learning objectives

Attainment of a good majority of the relevant learning objectives

Attainment of substantial majority of the relevant learning objectives

Attainment of nearly all of the relevant learning objectives