11. Assume that you are a portfolio manager at Challenger Fund. You have just concluded a portfolio strategy meeting with your team of analysts and decided to sell down the stocks in Trouble Some Mining (TSM). You observed that the share price of TSM was $5.50 at the close and decided to place a sell order with your trader at MacQuary Equities (ME) for 1,000,000 shares with a limit price of $5.25. Your trader at ME was instructed to find the best way to execute your order. The market opened the next day at $5.45 and the following table contains the trades that were executed in the market for the entire day. The trades carried out for you are marked with the indicator ME.

(20 marks)

Time	Volume	Price	Indicator
10:15	70,000	5.45
10:44	50,000	5.40	ME
11:36	60,000	5.35
11:40	2,000	5.42	ME
11:59	400,000	5.38
12:05	400,000	5.36	ME
12:30	150,000	5.25
13:42	75,000	5.37
14:39	420,000	5.25	ME
15:00	87,000	5.18
15:32	72,000	5.12
Close		5.10

1. Compute and discuss the ME traders performance using the volume-weighted average price as a benchmark. (6 marks)

2. Compute and discuss the ME traders performance using the implementation shortfall method. The brokerage cost including all explicit fees is $0.01/share. (8 marks)

3. As a trader for a large hedge fund that uses momentum strategies in small cap stocks, your end-of-year bonus is awarded based on your trading performance. Your manager is considering which of the two previously mentioned benchmarks to use to determine your performance. Discuss how the two methods could affect the outcome of your bonus. (6 marks)