This is an economic analysis homework assignment. Follow the instructions given and use the bolded/yellow circled options as the ones to work with. Can use excel, upload your answers for thumbs up!
Note:
You are not allowed to sell your purchased ETF during the given period.
For the short term investment, your initial investment must consist of three equities, one from each
of the groups in Table 1.
Chegg Home Study tools My courses My books Career Life Post a new question Get an expert answer within hours! How it works Submit only ONE QUESTION per post CENOTICIES - 2. You are required to set up an Investment Club with the objective of constructing and managing a portfolio of shares. The members of the club have agreed to invest a total of $200,000. The members of the club have agreed that half of the $200,000 will be invested in speculative short-term stocks and the other half to be invested in ETFs (Exchange Traded Funds). The objective is to construct and manage a portfolio of equities within the limitations of the scenario set out below for the time period 1st March, 2020 to 28th February, 2021. 3. For the long term investment (i.e., ETFs) you must invest in one of the ten ETFs listed below for the whole period: O O Option 0: Invesco S&P 500 GARP ETF (SPGP) Option 1: iShares Russell Top 200 Growth ETF (IWY) Option 2: Vanguard Mega Cap Growth ETF (MGK) Option 3: iShares Russell 1000 Growth ETF (IWF) Option 4: SPDR Portfolio S&P 500 Growth ETF (SPYG) Option 5: Invesco S&P 500 Pure Growth ETF (RPG) Option 6: Invesco QQQ Trust (QQQ) Option 7: iShares MSCI USA Value Factor ETF (VLUE) Option 8: Vanguard Russell 1000 Value Index Fund ETF (VONV) Option 9: Invesco S&P 500 Revenue ETF (RWL) O Table 1: Short Term Investment list Options Group 1 Group 2 Group 3 0 Nvidia (NVDA) Twitter (TWTR) Blink Charging (BLNK) 1 Nio (NIO) PayPal (PYPL) Jumia Technologies (JMIA) 2 Roku (ROKU) Qualcomm (QCOM) Charge Point (CHPT) 3 Farfetch (FTCH) Zoom (ZM) Zomedica (ZOM) 4 GameStop (GME) Microsoft (MSFT) Workhorse (WKHS) 5 General Electric (GE) Facebook (FB) Ocugen Inc (OCGN) 6 Trade Desk (TTD) Disney (DIS) Bloom Energy (BE) 7 Okta (OKTA) Apple (AAPL) Nano Dimension (NNDM) 8 Salesforce (CRM) Netflix (NFLX) Binamo Genomics (BNGO) 9 Square (SQ) Twilio (TWLO) Luminar Technologies (LAZR) For the short term investments, you will have to trade cach equity every three months and reinvest the money in another equity from the same group. The reinvestment must be justified by some parameter or criteria set by you that reflects the attractiveness of investing in that new equity. Additional limitations on short-term trading are as follows: O Each individual equity must be held for three months at a time. Every three month these equities should be sold and new ones should be purchased. A previously held equity can be repurchased if atleast three months have passed. When reinvesting, consider the data from the previous trading periods. You may not use data from the next trading periods as a measure of justification. Invest at least 10% of your total available short term investment in each group. For simplicity, the funds invested in each group, also their profit and losses cannot be transferred to another group. Using the closing prices for February 28th, 2021 - do your final calculations. (a) Total portfolio return (ignore time value of money) (b) Total return on Long-Term Investment (ETFs) (ignore time value of money) (c) Total return on Short-Term Investments (Individual Stocks) (ignore time value of money) (d) IRR of total investment before tax (e) IRR of Long-Term Investment before tax (f) IRR of Short-Term Investments before tax 2 IRR of total investment after tax (h) IRR of Long-Term Investment after tax (i) IRR of Short-Term Investments after tax (j) For the Short-Term Investment (after tax), use the IRR of the Long-Term investment (after tax) as the MARR (Minimum Attractive Rate of Return) to make a suggestion on which option (Short-term vs Long-term) you would have invested in if you only had $100,000. (k) ERR of Short-Term Investment (after tax) using the IRR of the Long-Term investment (after tax) as the MARR (Minimum Attractive Rate of Return) value. Additional information for calculations: (a) Assume monthly compounding and track the cash flow for each month for easier calculation, i.e., you will have 12 cash in-flows for each group in the short term investment plan. (b) To calculate the cash flows for each month, subtract the previous month's closing prices from the current month's closing prices and then multiply this value with the number of stocks. For example, if you had 30 shares of company A which had a closing price of $15.50 and $16.00 on March 31st and April 30th, respectively, then your cash in-flow for April would be $(16.00- 15.50) x 30 = $15. (c) Be careful when calculating the cash flow at the 12-month mark. You will need to add your initial investment to the cash inflow to get the correct result. For example, if initially, you invested $1000 in Group A, at the end of the year since you sold everything you need to add back this money to your cashflow. So, if your profit for February was $14.50 in this group, your total cash flow for this month will be $(1000 + 14.5) = $1014.5. (d) For determining the Capital gains income tax rate, select any tax bracket you deem you would fit in, just cite your source in your report (do not use the corporate rate). (e) Use Google Finance or any other respectable public resource to get the stock prices. Chegg Home Study tools My courses My books Career Life Post a new question Get an expert answer within hours! How it works Submit only ONE QUESTION per post CENOTICIES - 2. You are required to set up an Investment Club with the objective of constructing and managing a portfolio of shares. The members of the club have agreed to invest a total of $200,000. The members of the club have agreed that half of the $200,000 will be invested in speculative short-term stocks and the other half to be invested in ETFs (Exchange Traded Funds). The objective is to construct and manage a portfolio of equities within the limitations of the scenario set out below for the time period 1st March, 2020 to 28th February, 2021. 3. For the long term investment (i.e., ETFs) you must invest in one of the ten ETFs listed below for the whole period: O O Option 0: Invesco S&P 500 GARP ETF (SPGP) Option 1: iShares Russell Top 200 Growth ETF (IWY) Option 2: Vanguard Mega Cap Growth ETF (MGK) Option 3: iShares Russell 1000 Growth ETF (IWF) Option 4: SPDR Portfolio S&P 500 Growth ETF (SPYG) Option 5: Invesco S&P 500 Pure Growth ETF (RPG) Option 6: Invesco QQQ Trust (QQQ) Option 7: iShares MSCI USA Value Factor ETF (VLUE) Option 8: Vanguard Russell 1000 Value Index Fund ETF (VONV) Option 9: Invesco S&P 500 Revenue ETF (RWL) O Table 1: Short Term Investment list Options Group 1 Group 2 Group 3 0 Nvidia (NVDA) Twitter (TWTR) Blink Charging (BLNK) 1 Nio (NIO) PayPal (PYPL) Jumia Technologies (JMIA) 2 Roku (ROKU) Qualcomm (QCOM) Charge Point (CHPT) 3 Farfetch (FTCH) Zoom (ZM) Zomedica (ZOM) 4 GameStop (GME) Microsoft (MSFT) Workhorse (WKHS) 5 General Electric (GE) Facebook (FB) Ocugen Inc (OCGN) 6 Trade Desk (TTD) Disney (DIS) Bloom Energy (BE) 7 Okta (OKTA) Apple (AAPL) Nano Dimension (NNDM) 8 Salesforce (CRM) Netflix (NFLX) Binamo Genomics (BNGO) 9 Square (SQ) Twilio (TWLO) Luminar Technologies (LAZR) For the short term investments, you will have to trade cach equity every three months and reinvest the money in another equity from the same group. The reinvestment must be justified by some parameter or criteria set by you that reflects the attractiveness of investing in that new equity. Additional limitations on short-term trading are as follows: O Each individual equity must be held for three months at a time. Every three month these equities should be sold and new ones should be purchased. A previously held equity can be repurchased if atleast three months have passed. When reinvesting, consider the data from the previous trading periods. You may not use data from the next trading periods as a measure of justification. Invest at least 10% of your total available short term investment in each group. For simplicity, the funds invested in each group, also their profit and losses cannot be transferred to another group. Using the closing prices for February 28th, 2021 - do your final calculations. (a) Total portfolio return (ignore time value of money) (b) Total return on Long-Term Investment (ETFs) (ignore time value of money) (c) Total return on Short-Term Investments (Individual Stocks) (ignore time value of money) (d) IRR of total investment before tax (e) IRR of Long-Term Investment before tax (f) IRR of Short-Term Investments before tax 2 IRR of total investment after tax (h) IRR of Long-Term Investment after tax (i) IRR of Short-Term Investments after tax (j) For the Short-Term Investment (after tax), use the IRR of the Long-Term investment (after tax) as the MARR (Minimum Attractive Rate of Return) to make a suggestion on which option (Short-term vs Long-term) you would have invested in if you only had $100,000. (k) ERR of Short-Term Investment (after tax) using the IRR of the Long-Term investment (after tax) as the MARR (Minimum Attractive Rate of Return) value. Additional information for calculations: (a) Assume monthly compounding and track the cash flow for each month for easier calculation, i.e., you will have 12 cash in-flows for each group in the short term investment plan. (b) To calculate the cash flows for each month, subtract the previous month's closing prices from the current month's closing prices and then multiply this value with the number of stocks. For example, if you had 30 shares of company A which had a closing price of $15.50 and $16.00 on March 31st and April 30th, respectively, then your cash in-flow for April would be $(16.00- 15.50) x 30 = $15. (c) Be careful when calculating the cash flow at the 12-month mark. You will need to add your initial investment to the cash inflow to get the correct result. For example, if initially, you invested $1000 in Group A, at the end of the year since you sold everything you need to add back this money to your cashflow. So, if your profit for February was $14.50 in this group, your total cash flow for this month will be $(1000 + 14.5) = $1014.5. (d) For determining the Capital gains income tax rate, select any tax bracket you deem you would fit in, just cite your source in your report (do not use the corporate rate). (e) Use Google Finance or any other respectable public resource to get the stock prices
