Finance 450: Securities Analysis
Fall 2002
Dr. Pete’s Finance 450 Portfolio Challenge VI
The “Homework, Participation & Integrated Portfolio Projects (Group-based)” portion of your grade for
this class will involve your participation in Dr. Pete’s Finance 450 Portfolio Challenge on the Virtual Stock
Exchange (http://www.virtualstockexchange.com/) and a number of homework projects associated with
this Portfolio Challenge. In this simulation, you and a group of four to six of your classmates will perform
the role of the management team for a small start-up equity investment fund with $50,000,000 to invest.
As part of this challenge, each investment management team must develop a mission statement for their
fund and then derive a portfolio investment strategy that is consistent with that mission. The investment
strategy can be altered over time to match current market conditions, but it must remain consistent with the
fund’s mission statement. (Fund investors don’t like investing in one type of fund only to have their
portfolio managers change course in midstream and turn into another type of fund!) Some of the specific
information necessary to get started on this project is as follows:
Specifics:
1.
Each student will become part of a portfolio management team with from four to six members.
2.
To enter the simulation, you must first go to the VSE homepage (www.virtualstockexchange.com).
From there, go to the competition by entering the competition’s ID (“DrPete450_6”) in the space
provided. Once you have entered the competition’s homepage, click on the “Join!” button. From
there, the VSE will prompt you the rest of the way.
3.
All trades will be executed through the www.virtualstockexchange.com website. The competition ID
is: DrPete450_6. The password for the competition is: Munger (as in Charlie Munger, the ViceChairman of Berkshire-Hathaway). Please note that the competition ID and password are casesensitive! Registration for the simulation begins on September 13, 2002, and trading will run through
December 6, 2002.
4.
All trades will be charged a commission ($19.95 per trade), and unused cash balances will earn
interest at a rate of 1.64% per annum. Short selling and margin purchases are permitted, but margin
loans will be charged interest at a rate of 4.75% per annum.
5.
Various homework assignments and projects will be given throughout the semester. The first
assignment will be to develop, and to present before the class, your fund’s strategy and mission
statement. Remember that this mission statement should guide your transactions throughout the
semester. In addition to this initial in-class presentation, a brief weekly update on your portfolio’s
status must be presented to the rest of the class each week.
6.
A minimum of eight different stocks must be purchased over the course of the simulation; there is no
maximum.
7.
The end goal of investing, of course, is to make money, both in absolute terms and on a risk-adjusted
basis, by maximizing the final total portfolio value. Consequently, 10% of your final “Homework,
Participation, and Integrated Portfolio Projects” grade will come from finishing above the median
performance for the class. Throughout the semester, total portfolio values will be posted on a periodic
basis.
8.
Please note that while 10% of your Homework, et. al., grade is dependent on final investment results,
the remaining 90% of the points are independent of performance, but will instead depend upon such
factors as the thoroughness with which the various assignments are completed, their overall
presentation, and, finally, an intra-group assessment of the extent of each team member’s contribution.
Thus, while performance is important, the process and learning are of much greater importance than
the actual performance.
Good luck trading, and HAVE FUN!!
Finance 450: Securities Analysis
Fall 2002
Dr. Pete’s Finance 450 Portfolio Challenge VI
Fund Management Team Registration Sheet
Fund Name (Your VSE Username) _________________________________________
Fund CEO (largely an honorary position)_____________________________________
CEO’s E-mail Address ___________________________________________________
Alternative E-mail _______________________________________________________
Last Name
First Name
e-mail
Instructions: One page per team, please. Fund name is up to you; creativity is encouraged!
Finance 450: Securities Analysis
Fall 2002
Dr. Pete’s Finance 450 Portfolio Challenge VI
Intra-Group Assessment
Fund Name _________________________________________
Fund CEO___________________________________________
Last Name
First Name
Grade
Instructions: One page per student. Submissions are due on the day of the Final Exam.
Please list each team member (including yourself) and a grade reflecting that person’s
contribution to the team. Each team member should be graded on a scale of 1 to 10. Team
members who contributed more should receive a higher grade, while those who contributed less
should receive a lower score. If everyone contributed equally, then the group grades should
include a score of 10 for everyone.
Results of this assessment will be kept confidential.