Hey i need you help with my Portfolio final report. i get some of them and want you to finish it, i will upload the professor sample report, and half of my work, plus the week 4 and week 5 report from you, and you can add them up and make it look good. hope you can help me.

Portfolio Management Project 1 Portfolio Management Project FINC 340 Professor: Thomas G. Scheller By Sophalla S Sov Portfolio Management Project 2 Abstract People always want to have a wonderful life and for their love one. The portfolio management is the best way to create a simple project that can help them to monitoring their money in the future. An investment is always lucrative and supportive in future, when it gets the conservative desired income in the future. It is very important that, the portfolio of investment is always monitored closely and appropriate required decisions are made as and when needed. This project helps the client and the manager to have a clear understanding what type of portfolio will be set up to accomplish specific goals. The main purpose of this project is the actual investments of 10 common stocks, 3 mutual funds, 2 ETFs, 5 bonds, 5 option contracts and 5 futures contracts are chosen based on the investment policy. The market dynamics need to be measured in a frequent basis and suitable needful actions should be in place always. It should be ensured that, the entire amount of investment is not only blocked in a particular industry in order to avoid concentration of risk of investment and go for designing a portfolio which will fetch average return to the investor. Portfolio Management Project 3 Introduction Life will becomes beautiful, when decisions are taken properly and always necessary if a judicious and appropriate decision is taken up while thinking of investment. In this situation the client wants a diversified portfolio with $100,000 invested in each of the following types of securities: Stocks, Bonds, Options and Futures. The expertise in the field of investment is very important while going for investment. The overlook and the outlook of the industry that is selected for investment need to be gauged from all the aspects. Understanding an investor needs and recommending an appropriate strategy for investment is very crucial in the field of investment. In this project, the client will be Hun Tann. With $400,000 worth of assets allocated in different mix of investments, the goal is to protect and enhance the value of the portfolio. This project will discuss risk and return objectives, what changes should be made to investment policy statement, why specific securities were selected, investment performance, portfolio risk and what was learned from this project. Investment Policy The Investment Policy statement (IPS) is intended to create guidelines for evaluating investment options that would yield positive returns and bear less risk. This IPS is establishing a clear understanding between Hun Tann known as investor and Sophalla Sun Sov known as financial advisor, to set forth a description between the bonds, securities, and assets that would be most profitable. This portfolio shall specifically cover the following areas: The objectives for the investment plan The risk tolerance, Target allocation, Selection criteria, Monitoring and preview process Portfolio Management Project 4 Week 2 - Purchase a Portfolio of 10 Common Stocks, 3, Mutual Funds, and 2 ETFs At Beginning of Week 2 Stock Ticker Symbol WEC GDX NHTC LXK ABX T AAPL D PKI DOW PTCIX TLRIX MLLBX ILTB BLV Total Portfolio Number of Shares 100 200 100 100 400 200 100 150 250 100 Purchase Price Per Share 59.12 21.44 34.13 33.11 14.79 38.51 105.67 72.92 47.3 50.02 400 200 400 150 100 10.93 10.47 11.67 62.5 91.86 Beginning Value Total Investment $5,912.00 $4,288.00 $3,413.00 $3,311.00 $5,916.00 $7,702.00 $10,567.00 $10,938.00 $11,825.00 $5,002.00 Per Share Price End of Week 3 $59.48 $22.10 $34.47 $33.20 $15.22 $39.05 $106.32 $71.95 $47.48 $50.02 $4,372.00 $10.95 $2,094.00 $10.58 $4,668.00 $11.80 $9,375.00 $62.75 $9,186.00 $92.38 $98,569.00 INVEST $100,000 Week 3 - Purchase a Portfolio of 5 Bonds at Beginning of Week 3 (Note: Assume $1,000 par value for all bonds.) Issuer C GS BAC CMCSA AZN Coupon Rate & Current Price Per Number of Bonds Maturity Bond 200 July. 30, 2027 (4.65%) $104.90 170 Oct. 1,2037(6.75%) $119.80 200 July. 31, 2028 (7%) $136.60 100 Aug.15,2045(4.6%) $101.20 150 Nov.13,2031(5.75%) $133.20 Beginning Value Total Investment $20,980.00 $20,366.00 $27,320.00 $10,120.00 $19,980.00 $98,766.00 Week 4 - Purchase a Portfolio of 5 Option Contracts At Beginning of Week 4 (Note: Recommend Using CBOE.com for O Issuer GILD UTX DVA UTX DIS Number of Option Contracts (100 Options in a Contract) 100 100 100 100 200 Month of Maturity 16-Apr Apr-16 16-Apr 16-Apr 16-Apr Call or Put Call Call Call Put Put Ask Price per Option (Use "Ask" Price) $0.20 $1.43 $0.40 $0.81 $3.60 Week 5 - Purchase a Portfolio of 5 Futures Contracts At Beginning of Week 6 (Note: Recommend Using CME.com for F Commodity, Energy, Equity, Interest Rate, Metals, Weather, Number of etc. Futures Contracts Corn 10 Maturity Date March 2014 Number of Units in Each (1) Futures Contract (bushels, pounds, units, barrels, etc.) 5,000 Price per Unit $4.32 ASSIGNMENTS SITUATION As a professional financial advisor, it is your assignment to create and manage a long-term portfolio for a client. The client wants a diversified portfolio with $100,000 invested in each of the following types of securities: Stocks, Bonds, Options and Futures. WEEK 1 Develop an investment policy statement to guide the portfolio construction and asset management. The investment policy statement must have quantitative objectives for both return and risk. The investment policy statement must be presented to the class in the Week 1 Discussion. WEEK 2 Select 15 stocks for the portfolio and record all required information. Submit Investment Policy statement for evaluation and grading. WEEK 3 Select 5 bonds for the portfolio and record all required information. End of Week - Update price information for the stocks. WEEK 4 Select 5 options for the portfolio and record all required information. End of Week - Update price information for the stocks. End of Week - Update price information for the bonds. WEEK 5 Select 5 futures contracts and record all required information. End of Week - Update price information for the stocks. End of Week - Update price information for the bonds. End of Week - Update price information for the options. WEEK 6 End of Week - Update price information for the stocks. End of Week - Update price information for the bonds. End of Week - Update price information for the options. End of Week - Update price information for the futures. WEEK 7 COMPLETE AND SUBMIT FINAL PORTFOLIO ANALYSIS (ASSIGNED QUESTIONS) Submit final written report. The report must organized and presented using the required subheadings. Beginning of Week 2 Per Share Price End of Week 4 $61.24 $22.76 $34.81 $33.60 $15.17 $38.50 $108.34 $73.13 $48.50 $51.09 Per Share Price End of Week 5 $62.78 $23.42 $35.49 $33.90 $15.27 $38.48 $108.66 $73.04 $50.00 $50.77 Per Share Price End of Week 6 $63.00 $24.08 $36.17 $34.00 $15.36 $39.10 $109.10 $74.32 $50.91 $52.17 $11.25 $10.68 $11.96 $63.25 $93.43 $11.34 $10.71 $11.98 $62.97 $93.92 $11.40 $11.20 $12.00 $63.21 $94.00 Estimated Ending Value of Dividends Paid Total Investment per Share at End of Week 6 $0.90 $6,390.00 $0.66 $4,948.00 $0.59 $3,676.00 $0.94 $3,494.00 $0.08 $6,176.00 $1.92 $8,204.00 $2.08 $11,118.00 $3.83 $11,722.50 $0.56 $12,867.50 $3.62 $5,579.00 $3.02 $2.50 $1.12 $0.20 $0.30 $5,768.00 $2,740.00 $5,248.00 $9,511.50 $9,430.00 $106,872.50 00 par value for all bonds.) Per Bond Price End of Week 4 $104.30 $119.81 $135.23 $102.76 $133.54 Invest $100,000 Per Bond Price End of Week 5 $103.10 $122.25 $136.78 $112.23 $133.97 Per Bond Ending Value of Per Bond Price Estimated Interest Total Investment End of Week 6 Earned at End of Week 6 $108.20 $4.35 $22,510.00 $124.60 $5.21 $22,067.70 $136.85 $3.35 $28,040.00 $113.24 $3.95 $11,719.00 $134.34 $3.05 $20,608.50 $104,945.20 ecommend Using CBOE.com for Option Information.) Per Option Beginning Value Premium End of Total Investment Week 5 $2,000.00 $0.25 $14,300.00 $1.48 $4,000.00 $0.35 $8,100.00 $0.75 $72,000.00 $3.50 $98,400.00 Invest $100,000 Per Option Premium End of Week 6 $0.40 $1.50 $0.50 $1.20 $3.78 Recommend Using CME.com for Futures Information.) Ending Value of Total Investment at End of Week 6 $4,000.00 $15,000.00 $5,000.00 $12,000.00 $75,600.00 $107,600.00 Estimated Margin per Contract $2,363.00 Invest $100,000 portfolio for a client. of securities: Estimated Total Total Beginning Price per Unit Per Total Ending Margin for All Notional (Face) Unit End of Week Notional (Face) Contracts Value of Contracts 6 Value of Contracts $23,630.00 $216,000.00 $4.40 $220,000.00 Example $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Portfolio Contract Week 5 Corn: The number of future contracts is 10, the number of units in each (1) future contracts is $2,789, and the price per unit is $6.10, while the estimated margin per contract is taken to be $1,250. Therefore, the estimated total margin for all contacts of wheat is 10*$1,250, equals to $12,500. This asset value is 12.5% which is between the given range 5% - 25% in the initial IPS. According to Erick Norland, (2016) corn, wheat, and soy future have been trading in low ranges due to very recent El Nio and strong moves in the U.S dollar. However, this might not last forever due to a variety of many reasons; one being that weather is quite unpredictable. Erick Norland, (2016) argues that due to some of such reasons, the prices of corn, soy and wheat will soon shoot up highly. Crude oil Crude oil futures are one of the highly profitable. Am considering 10 future contracts, whereby each contract has 3,337 units and each goes for $44.95. The estimated margin is $3,200; thus the estimated total margin for all contracts is $32,000. This is higher than 25% as given in the IPS but it's that way in orders to utilize the $100,000 and since crude oil is most actively traded than the rest. Therefore, crude oil is taken as the least risky of all future contracts. Euro Fx Am investing in 6 numbers of future contracts, whereby each contract is costing $1.13 and the number of units in each contract is 119,417. The estimated margin as provided by cme.com is $3,350, thus the total estimated margin is 6*$3,350 equals to $20,100. This is below the 25% maximum for futures as given in the original IPS. Despite the portfolio risks, taxation, interest rates risks, and currency risk, the Euro FX is a better option as protects your investment against these foreign risks. Cathy Pareto, (2016) founded that it minimizes currency risks as it can lock current exchange rate by entering into an offsetting currency futures position. Natural Gas Am considering 10 future contracts of natural gas, whereby the number of units in each contract is 14,199 and the price per unit is $2.18. The estimated margin is $1,350, thus the total estimated margin for all contracts is $1,350, and thus the total estimated margin for all contracts is $13,500 which is still under the original IPS plan. Jesse Emspak, (2016) argues that investing in natural gas is good as demand keeps on increasing and increase in prices due to that demand has been seen over the years. He stated: \"Despite the seasonality fluctuations, over the years price is heavily influenced by production and distribution\". It's thus not a risky venture and it has positive returns. Copper Am investing in 8 future contracts of copper, each costing $2.17 and the number of units in each contract is 52,079. The estimated margin is $2,600 making the total estimated margin for all contracts (8*2,600) be 20,800. This is also as per the initial plan as is more than 20.8%. As Amine Bouchentouf, (2016) describes, there's a commodities future available for copper trading. Though cme.com analysts found its volatility increasing Amine, (2016) holds that the demand fr copper from china, India, and other advanced countries is increasing, thus leading to an overall upward price. References Amine Bouchentouf, (2016) Invest in commodities through future contracts. Retrieved from m.dummies.com/how-to/convert/invest-in-commodities-through-copper-futurescontr.html Cathy Pareto, (2016) Protect your foreign investments from currency risk. Retrieved from www.investopedia.com/articles/forex/08/invest-forex.asp Erick Norland, (2016) Corn, soy and wheat volatility set to spike? Retrieved from www.cmegroup.com/educatio/featured-reports/corn-soy-and-wheat-volatility-set-tospike.html Jesse Emspak, (2016) Investing in natural gas? Eye ETFs. Seasonality. Retrieved from www.investopedia.com/articles/investing/082814/investing-natural-gas-eye-etfsseasonality.asp Portfolio Management Project 1 Portfolio Management Project Your Name FINC 340 My Name Portfolio Management Project 2 Abstract This project deals with many aspects of portfolio management. The investment policy helps the client and the manager to have a clear understanding what type of portfolio will be set up to accomplish specific goals. Changes that should be corrected from the initial investment policy are thoroughly explained. Then the actual investments of 10 common stocks, 3 mutual funds, 2 ETFs, 5 bonds, 5 option contracts and 5 futures contracts are chosen based on the investment policy. These investments each have certain purpose to achieve the goal mentioned in the investment policy. The portfolio overall had made profit at the end of week 6, but when looking at the risk and beta of the portfolio, there was too much risk involved. It might be due to the small sample size of just few weeks but it's still a concern. Some of the ways that this problem could be fixed in other portfolios is to have a very clear and detailed investment policy and for manager to follow strictly based on that agreement. It's vital for manager to understand what the client want exactly and what they are trying achieve. Portfolio Management Project 3 Introduction Given the situation where the client wants a diversified portfolio with $100,000 invested in each of the following types of securities: Stocks, Bonds, Options and Futures. In this project, the client will be . With $400,000 worth of assets allocated in different mix of investments, the goal is to protect and enhance the values of the portfolio. The reason why his money is separated into stocks, bonds, options and futures are for diversification. Given the goals of the client and economic conditions, this project will discuss risk and return objectives, what changes should be made to investment policy statement, why specific securities were selected, investment performance, portfolio risk and what was learned from this project. Investment Policy The purpose of this investment Policy Statement is to establish a clear understanding between the investor and the investment advisor as to the investment objectives and policies applicable to the investor's investment portfolio. This statement will: Establish reasonable expectations, objectives, and guidelines in the investment of the Portfolio's assets Set forth an investment structure detailing permitted asset classes, normal allocations and permissible ranges of exposure for the portfolio Encourage effective communication between the Investor and the Advisor Create the Framework for a well diversified asset mix that can be expected to generate acceptable long term returns at a level of risk suitable to the investor The statement has been developed from an evaluation of many key factors which impact the investor's specific situation and investment objectives. This statement is not a contract but Portfolio Management Project 4 intended to be a summary of an investment philosophy that provides guidance for the investor and the advisor. Scope and Purpose , as financial adviser to , is responsible to develop a diversified portfolio with $100,000 invested in each of the following types of securities: Stocks, Bonds, Options and Futures. Governance is responsible for monitoring the investing requirements of as well as monitoring investment and economic issues, and is responsible for suggesting changes to the IPS as necessary. will also suggest revisions annually after reviewing the asset allocation. also has responsibility of evaluating all the risk and make sure the investments do not exceed tolerable limits. Goal and Objective has two kids who are in elementary school. They will be attending college in little more than 10 years. 's goal is to invest $100,000 on different types of securities to have enough to pay for the two kids' college and also to have enough financially when he plans to retire in 20 years. Types of Investments Thorough research will be done on companies when choosing the common stocks. How the company deals with their products and development of future products will be looked at. Company's research & development, profit margin, and future outlook will be looked at when selecting common stocks. Also, well-known companies will be mixed with lesser-known companies in order to balance the risk from lesser-known companies. Portfolio Management Project 5 The mutual funds that will be selected will be for a long-term need, for college fund and retirement fund. There will be good amount of risk and volatility, however, there is potential for a large reward. Two will be selected from a long-term capital appreciation fund while one will be selected from balanced fund, which will balance out the risk with riskier mutual funds. The factors for choosing the ETFs will include level of assets, trading activity and index that has wide industry. These factors will be considered to make sure that the ETF has a good liquidity. Another factor to consider will be when the ETF was constructed. Any newfangled ETFs will be avoided. One of the first things that will be considered when choosing the bonds will be the rating for risk management. The goal is to lower the risk because the fund from bonds are mainly for college fund and retirement fund as well. The maturity dates will be picked so that there are ones for college fund and ones that expire around retirement time. When looking at yield, diversification will be used so that there is a balance between risk and yield. Option contracts that will be selected will be for short-term, as to this option is usually cheaper and provides short-term asset. The risk and reward will be balanced by mixing call options and put options. Lastly, the future contracts will be mainly based on what goes on in each sectors of the economy. That is going to tell whether to pick the future contracts or not. The maturity dates were diversified in order to balance out the risk and reward. Expected return Common stocks, mutual funds, ETFs and bonds will be mainly used for long-term investment, mostly return for college fund and retirement fund. The option contracts and future contracts will give you return for the short-term liquidity. Portfolio Management Project 6 Changes to Investment Policy Based on the experience gained managing the portfolio, there are some aspects that I would like to add or describe more in detail in the initial investment policy statement. First thing is including investment constraints. Although the client is willing to spend $400,000 in different investments, discussing the liquidity constraints on whether he needs a certain amount of liquidity back at certain point would have helped with choosing what types of investment. If not liquidity constraints, discussing more time constraint would have set a clear and direct guideline on what types of investments to choose and what the maturity for those investments would be. After I was looking at all the data from portfolio, I also realized that tax concerns were not discussed. Since different investments have different tax laws, discussing with the client about tax concerns in investment policy would have also helped choosing the types of investment. Special circumstances where client does not want to invest in certain companies due to not sharing the same vision would've been also helpful in investment policy. Secondly, discussing risk tolerance more in depth would be useful. I did choose investments with diversification so that there would be balance of risk and return but putting exactly what the risk tolerance of the client and presenting with the worst-case returns for different asset classes historically would be helpful for the client. If the client did not have stable sources of funds available, the client might have wanted a low risk portfolio, but for this project, it's assumed that the client has stable sources of funds. Third, discussing the benchmark would've been helpful for the client to be able to compare different investments' performance. This will also help the client to let the manager know what he wants to achieve based on the benchmark. Lastly, it would have been better to discuss expected return more in depth. This helps the client how much he should be expected whenever the portfolio comes to maturity. Portfolio Management Project 7 Construction of Portfolio As discussed in investment policy, many factors were considered when choosing the common stocks. I will go over few of them as examples. Domino's Pizza Inc. is one of the most well known companies in the world. When looking at their SEC 10-K, you realize that they put a huge emphasis on research and development. They mention that they \"do not consider the amounts spend on research and development to be material.\" (EDGAR) Another article discusses a way to order pizza even easier and faster. For those who own an apple watch, \"the company has launched a one tap easy order app.\" (Anderson, 2016) These future outlooks led me to choose Domino's Pizza Inc. I have also added two gold companies IBX and SMNF that are lesser-known companies. The price per share for those two companies is less than $8.00 per share. However recent article mentions that \"as over a billion Chinese people deal with the realities of currency Depreciation, the long term prospects for gold look better than they have for several years.\" (Tillier, 2016) However, because the price of gold fluctuates, those two stocks are high-risk & high-reward stocks. I paired them up with the likes of stable well-known companies with the likes of Domino's Pizza Inc. and AT&T, Inc. in order to create a diversification. The three mutual funds will be comprised of long-term capital appreciation fund and balanced fund. Pioneer Value A (PIOTX) fund and Janus Global Research T (JAWWX) fund both have holdings in stocks that are over 95%. This is going to increase the risk, but these are used for long-term mutual fund. ProFunds Telecom UltraSector Inc (TCPIX) have holding of 57% in stocks and 43% in cash. This is considered a balanced fund and although this is also going to be used for long-term, there is lower risk involved creating another diversification. The two ETFs chosen are Global X SuperDivident ETF (SDIV) and SPDR S&P International Dividend ETF (DWX). They both have trade volume of 344,848 and 173,382, which symbolize good liquidity for both. Also, Portfolio Management Project 8 since they both have net assets of upwards $700 million, there is no worry for liquidity. The fund inception dates are 2011 and 2008 respectively, so there is no worry of newfangled ETFs. When choosing the bonds, they were diversified as well. There are three corporate bonds and three municipal bonds. The two municipal bonds will be used for retirement fund because of the maturity date and the other three will be for the college fund. The Morgan Stanley has a high coupon rate of 10%, but the rest of the bonds including Goldman Sachs, Quebecor Inc. Royal Oak Mich and California Statewide who have a coupon rate of around 5% balances that yield out. When checking the ratings on Moody's, all five bonds had acceptable rating level. When dealing with option contracts, I tried to balance out the call and put options. Because the maximum loss for put options is unlimited, there are three call options to two put options to balance them out. The maturity of the option contracts are short as they are mainly used for short-term assets. Once they mature, then could be used for other investments. When deciding the future contracts, I looked mainly at the news and how different sectors are doing. I came across an article regarding copper that \"there is a growing chance of a short-term bound from oversold conditions.\" (Colombo, 2016) Another article mentions crude oil stating, \"Energy companies soared as the price of American benchmark crude jumped 9 percent.\" (The AP, 2016). Like the two example mentioned above, all five future contracts including natural gas, Euro FX and Coffee were all chosen based on what was happening in their respective sectors. Investment Performance All asset categories of portfolio were able to make profit during the holding period except for the future contracts. For stocks, the beginning value of total investment was $99,993.50 and the ending value of total investment at the end of week 6 was $112,882.38. In order to calculate the holding period return (HPR), we need to subtract the initial value of total investment from the Portfolio Management Project 9 ending value of total investment then divide by the initial investment. The holding period return is $12,888.88 and the return rate is 12.89%. If you compare that to S&P 500 during that time period, the HPR for the benchmark is 1.94%. During week two through week six, stocks made much more profit than the S&P 500. The stock that made the major increase were CoreSite Realty Corporation (COR), Domino's Pizza Inc. (DPZ), and Barrick Gold Corporation (ABX). COR and DPZ's price per share increased by six and 8 dollars respectively. ABX's price per share almost doubled from $7.58 to $12.54. This is due to investing on different underground mine in Nevada and Peru's Lagunas Norte mine (Gomez, 2016). There weren't any stocks whose per share value decreased. The initial expectation was that the overall stock value will increase and I believe they will only increase over time because of the research that many of the companies are doing to improve their products and services while markets suggest other products to be more in demand as well. For bonds, we are going to use government bonds as a benchmark bonds. When calculating the HRP for the five bonds that are selected, the beginning value is $99,943.15 and the ending value of investment is $100,252.70. The holding period return is $309.55 and the return rate is 3.1%. The index for the U.S. Treasury bond is $414.80 for initial value of investment and $419.04 for ending value of investment. The HPR for U.S. Treasury bond is at 2.44%. The portfolio performed slightly better than the benchmark index. The price per bond price actually decreased for all five bonds but the estimated interest earned is the only reason why the ending value of total investment was higher than the initial investment. However, these bonds have at least seven to almost 26 more years until they mature so there is no reason to worry about the decrease. I did not think to make any major profits during the first 4 weeks of investing in these five bonds and the results were expected based on initial expectation. Portfolio Management Project 10 However, as time passes and the interest on the bond increase while the bond price also increase, will only increase the profit of the bonds. For option contracts, the beginning value of total investments was $97,100.00 while the ending value of total investments was $106,000.00. There was HPR of $8,900 with the return rate being 9.17%. The benchmark for option contracts will be CBOE Holdings, Inc. The beginning price per option is $66.29 and the ending value per option is $61.68. Without an actual calculation, the HPR for the portfolio is way higher than that of the benchmark because benchmark has a negative HPR during this period of time. However, the option contracts in the portfolio didn't all improve. The only ones that had a higher per option premium were RRD1618C14 and DIN1618O90. DIN1618O90 issued by DineEquity, Inc. is what brought the ending value of total investments. It has the higher increase of per option premium of ninety cents. Combined with 200 contracts compared to the others with 100 contracts were able to increase the end value by a little. The results were very different from what was initially expected. Since the maturity month is only a month away, I chose these five option contracts to make quick profit but that didn't happen except for the one issued by DIN which saved option contracts as whole. The option contracts part of the portfolio will need active management so they could be sold at the right time. Lastly, future contract was the only with lower total ending value. The total beginning face value of contracts was $25,750,525.00 while the total ending face value of contracts was $25,314,025.00. There was a loss of $436,500 in the face value of contracts with the holding period return rate being -1.84%. Because the five future contracts were from different sectors in the economy, there was no benchmark to compare it with the five future contracts combined. The one future contract that hurt my portfolio the most was natural gas. This was a result of gas Portfolio Management Project 11 pricing plummeting \"dropping to below $32 a barrel, the cheapest oil has been in the last 12 years according to CNBC.\" (Jones, 2016) The price of crude oil increased by 60 cents per 1,000 barrel, which help portfolio balance out the loss from natural gas. The results for the future contracts were also different from the initial expectation. The three are very short-term future contracts so they will require active management as well. Euro FX and coffee contracts would be checked occasionally for reevaluation. Portfolio Risk The portfolio risk will be determined by calculating the beta for different parts of portfolio. Usually beta is calculated by covariance of the return of an asset and the return of the benchmark divided by the variance of the return of the benchmark. However, due to limited data, we are going to use the simple formula of (stock's rate of return - risk-free rate) / (market's rate of return - risk-free rate). The risk-free rate in this scenario is going to be substituted with the three month U.S. Treasury bill which is at .30% currently. If you plug the data in, the beta for the stocks is at 7.67. What this symbolizes is that the stock is more volatile than the market as a whole. Since there was a huge increase in a short amount of time, there is a possibility of dramatic price change in another short time period in either direction. This symbolizes high risk and high reward. Using the Security Market Line (SML), the expected return based on the capital asset pricing model is 12.88%. This also represents the unsystematic risk involved with the stocks. This has higher beta than I expected originally. I expected the beta to be somewhere between 0 and 1 so that the stock is less volatile than the market with less likely for dramatic price change but due for a steady increase. For bonds, the market rate of return was 2.44% while the bonds rate of return was 3.1%. Once calculated, the beta for the set of bonds comes out to be 1.31. The beta is still higher than 1 Portfolio Management Project 12 meaning there is a possibility of dramatic price change in short amount of time causing high risk and high reward situation. The beta was not as high as stocks so I am not worried about it as much. For stocks and bonds, this could be caused by a small sample size of just few weeks when they are both supposed to be long-term investments. Using the SML, we could find the expected return of the bonds to be 3.1%. The value is lower than the stocks once again, showing lower risk. The bonds portfolio risk was a lot closer to the initial expectation than that of stocks. Option contracts in the portfolio has rate of return of 9.17% compared to -6.95% market rate of return during week four through week six. The beta for option contracts calculates to be in the negatives. When there is a negative beta, it usually means that the contracts have inverse relation to the market. This is usually very unlikely but possible. Some examples of a negative beta are gold because they usually do better when the stock market declines. This is also very different from the initial expectation, as portfolio was not expecting a negative beta. However, this could also be caused by a small sample size. When using the SML, the expected return of the optional contracts is negative 13.9%. However, the actual data shows that we had increase in final value of total investment. The small sample size shows that these set of optional contracts are very risky. As mentioned above, regarding the future contracts, because all five are in different sectors of the economy, it's hard to put them as one and try to find the beta of the portfolio. However, comparing the future contracts separately shows that the future contracts are as risky as the optional contracts. However, we were only able to obtain the data for two weeks from the future contracts. Portfolio Management Project 13 What Was Learned While I was conducting this project, I realized that it is very important to understand and maintain the investment policy. Greed stopped me from making selections based on investment policy and more so on how to obtain more profit. That was not the main goal of the client. The main goal of the client was to invest for long-term and be able to use that asset for college fund and retirement fund. Although the sample size was too small to really show how the portfolio would've behaved, when calculating the risk, betas were consistently high. Investment policy needs to be strong and very detailed so that the client and the manager could follow the guideline agreed on the policy. This would get rid of all the confusions that lead for manager to pick the wrong investments for the client. After completing the project, I realize that my initial expectation and future outlook could have been strengthened. This could allow the client to be able to evaluate and compare the current results with the initial expectation and also be able to know what to expect in the future. Overall, I learned that portfolio management requires a lot more planning than I thought with attention to details being the very important part. You also have to be able to invest from the client's point of view instead of what you think would be best in general. Portfolio Management Project 14 References Anderson, E. (2016, January 1). Domino's launches 'ultimate hangover angel' that makes ordering pizza even easier. Retrieved February 24, 2016, from http://www.telegraph.co.uk/financeewsbysector/retailandconsumer/leisure/12077384/D ominos-launches-ultimate-hangover-angel-that-makes-ordering-pizza-even-easier.html Ahlback, J. D. (2003). INVESTMENT POLICY STATEMENT. Retrieved January 25, 2016, from http://www.ewp.rpi.edu/hartford/~youneh/INVII/Week 2/Investment Policy Statement/JD Powers/Investment Policy Statement.pdf Colombo, J. (2016, January 25). Is The Worst Over For Copper? Retrieved February 24, 2016, from http://www.forbes.com/sites/jessecolombo/2016/01/25/is-the-worst-over-forcopper/#1201a0967593 DPZ 10-K. (2016, February 25). Retrieved February 26, 2016, from http://yahoo.brand.edgaronline.com/DisplayFiling.aspx?TabIndex=2 Gomez, A. (2016, February 22). Here's Why Barrick Gold (ABX) Stock is Higher Today. Retrieved February 25, 2016, from http://www.thestreet.com/story/13466705/1/herersquo-s-why-barrick-gold-abx-stock-is-higher-today.html Elements of an Investment Policy Statement for Individual Investors. (2010, May). Retrieved January 25, 2016, from http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2010.n12.1 Fu, L. (2016, January 12). Low gas prices result of struggling world economy. Retrieved February 25, 2016, from http://www.redandblack.com/athensnews/low-gas-prices-resultof-struggling-world-economy/article_e862461c-b8ee-11e5-8861-eb53fb64d5eb.html Portfolio Management Project 15 Moody's - credit ratings, research, tools and analysis for the global capital markets. (n.d.). Retrieved February 26, 2016, from https://www.moodys.com/ Tillier, M. (2016, January 08). Gold is Now A Good Long Term Bet. Retrieved February 23, 2016, from http://www.nasdaq.com/article/gold-is-now-a-good-long-term-bet-cm563077 Investment Policy Statement Investments FINC 340 Professor: Thomas G. Scheller By Sophalla S Sov Introduction The Investment Policy statement (IPS) is intended to create guidelines for evaluating investment options that would yield positive returns and bear less risk. This IPS is establishing a clear understanding between Hun Tann known as investor and Sophalla Sun Sov known as financial advisor, to set forth a description between the bonds, securities, and assets that would be most profitable. This portfolio shall specifically cover the following areas: The objectives for the investment plan The risk tolerance, Target allocation, Selection criteria, Monitoring and preview process Statement of Objectives The general objective of this portfolio is to enhance the achievement of good investment returns that would enable achievement of greater life both after retirement and for his two children. The investor, Hun Tann is a 40 years old, work as a computer sciences manager at NASA Godard Space, looking to retire in 20 years and wanting to be able to live financially comfortable from his investments. His portfolio objectives are listed below: Looking forward to retire at the age of 60. Leave enough money for the two children. Have money to meet for all his needs and pay all bills in full and when they are accrued. To provide a wide range of choices through diversification along the risk- return spectrum. To invest in companies practicing green production, To ensure investment returns are measured alongside their respective asset benchmarks. Risk Tolerance The investor looks forward to invest $100, 000 in form of stocks, bonds, options and futures. He is looking forward to investing this money over the next 20 years till retirement. He expects to make profits or returns of not less than 8% on his investments and a tax rate of about 33%. The investor is therefore looking for an investment that would maximize his investment while minimizing the risks. Target Allocation: This target allocation is very important in under this portfolio and is one area that requires periodic preview and monitoring as shall be discussed later. It therefore follows this nature: The target allocations are as follows: Stocks: Not more than 65% but more that 40%, 50% is most preferable. Bonds: Not more than 40% but more than 20%, 30% is most preferable Options: Not more than 15% but more than 5% Others: Not more than 25% but more than 5% Selection Requirements For all investment, the selection criteria shall check for compliance with the investment policy guidelines in respect to the company's investment policy statement. The general guidelines shall be to measure the stock options in terms rate of return. The following shall be taken into consideration The diversification of investment options, Competitive fee structure, Tracking record of investment options, Tracking closely the stated investment objective. Periodic View The investment policy requires that I be charged the responsibility of monitoring the funding options regularly. The following criteria shall be used: Check whether they are in line with the investment objectives, Ascertain whether the original plan is being followed, Identify any regulatory impacts on the investment plan, Find out whether the costs involved in the process are according to the plan or they are high. Whether an investment option should be placed on a \"watch list\" for monitoring, which is between 3-5 years. Risk Management As financial advisor to Hun Tann, Sophalla Sun Sov will provide the performant of all investments in the portfolio at the end of each quarter. At this time, Hun Tann will also propose any transactions that need to be rebalanced to meet his target allocations. References PBS. (2016) Ethical investments. P.B. Sydall & Co. Perrie Croshaw. (2007) Ethical investing. Australia; Westpac Banking Corporation. TIIA-CREF, (2012) Sample of investment policy statement. New York: TIAA-CREF., LLC