Question

PLEASE ONE PAGE ASSIGNMENT (one-page maximum, less is more)

For this assignment, assume that you have $10,000 to invest. Using the internet, newspapers, investing chapter presentation materials or other sources for information, select at least 2 investments, starting on any date between Jan 21 – Feb 1. You may pick any investment instruments you wish including GICs, stocks (equities), bonds, mutual funds, gold, foreign exchange futures, keeping the funds under your mattress, or any other legitimate investment as long as there are at least *TWO* different types. In other words, don’t pick 2 stocks, 2 mutual funds, or 2 GICs. If you wish, you may also “buy” and “sell” during the period to change what investments you hold, but if you do, assume a $10 transaction fee and include the detail. This is a learning exercise, so grading is based on what you think happened and what you learned. You are *NOT* being graded on whether your investments made or lost money, rather on what you learned in the process. The assignment is worth 15% of your course mark, so invest you time accordingly.

The assignment is in two parts:

First part is your starting position. Hand in on paper (one-page maximum, less is more) in the February 5 or 6 class:
1. What is your investing objective?
2. List your original investments, amount and date “bought”, and your reasons as to why each was chosen.

Answer 1

Investment Objective: To earn a high return in short run to grow the $10,000 for long term reinvestment purpose.

-   Investments made $10,000 (Portfolio):
1.   $3,500 (35%) in Stocks by Jan 21
2.   $3,000 (30%) in Foreign Exchange (“Forex”) by Jan 21
3.   $1,800 (18%) in Gold by Jan 21
4.   $1,700 (17%) in Mutual Funds by Jan 21
Rationale for Investing in above Stocks:
1.   Investing 35% of the available funds in Stocks follows the reason that the new Financial Year has just started, and this is the time when market usually kicks off after a few weeks quiescent state of year end and festive. It is the time for implementation of certain announced financial & economic reforms within the domestic market. It’s the time the market is less volatile for price movements and just starts to fluctuate positively.
2.   Investing (30%) of the available funds in Foreign Exchange (GBP) follows almost the similar rationale as in Stock investment, this is the period when the market is less volatile for price movements and just starts to fluctuate positively in the U.S. considering the fact the Investors set up the Investment objectives and start investing in more riskier options like Forex, and at the same time the European markets are almost in the middle of financial year and trade actively.
3.   Investing (18%) of the available funds in Gold would follow the reason that the commodity market would have stabilized state, and probably at its lowest level aftermath the financial year end & festive events. The prices can show a little upward movement due to the fact of relatively lower prices investing in commodity market.
4.   Investing (17%) of the available funds in Mutual funds of either the Index funds or large Cap. Funds to hedge in the market for the investments made as above. As a matter of fact, mutual fund investments may not provide a high return at this point of time, but can make sure we do not lose this money invested, and can likely earn a good return to compensate for some loss made in above riskier securities if the market turns bearish for certain sectors.
-   Investments didn’t actually perform against as per the expectations of earning high return, and the main reason being the absence of higher activity and trading due to recent closing at the financial year end. Also, to evade the risk of losing money in the market due to newly introduced political and economic reforms, the overall traded volume was relatively less.