Individual Term Paper Project: Students are required to complete one of the following projects. Suggested outlines are provided:
1. Economic Predictions Project.
Students will write a paper that predicts the Gross Domestic Product for the U.S. economy and several assigned countries. Several assigned industries are also required to be analyzed. Each student will make their prediction of the US's GDP for fiscal 1997 and 199. . An outline for completing this project is attached. (See Reilly and Brown text chapters 6, 13 and 14 for background information).
2. Industry and Company Analysis. An outline is for completing this project is attached. (See Reilly and Brown text chapters 12, 13, 18, 19 and 20 for background information).
3. Investing Across the Life Cycle. (A brief description is attached--ask for more detail if you think you want to do this project)
4. Analysis of a variety of mutual fund types (description is attached).
No outline is provided: Student turns in brief outline with project topic
5.Beta Adjusted Return Analysis of an Event (Requires use of Market Model see me about how to use this model).
6. Create portfolio that is consistent with a mutual fund objective and track its changes in value during the semester. Outline for an undergraduate project that is similar to this project.
7. An detailed analysis of how portfolio managers use financial derivatives.
8. Use Stock-Trak to trade a variety of securities from September 29, 1997 to December 5, 1997.
9. An detailed analysis of one of the recent finance debacles (e.g., Barings Banks, State of Wisconsin Pension Fund, Orange County, NASDAQ bid/ask spread, Solomon Brother Treasury Action Scandal, P&G's and Gibson Greeting Cards use of derivatives, etc.)
10. TAXES. Investigate the impact of the 1997 Tax Relieve Act on Investments. For example, what is the impact of the decision between buying stock and bonds? Another Tax Relieve Act project example, explain and analyze the differences between a deductible IRA, non-deductible IRA, Roth IRA and an Educational IRA.
11. Special instructor approved topic; e.g., review of on-line financial data sources or internet data sources.
Citations: Several assignments and projects require that you properly cite sources of information. References to publications in the text should appear as follows:
Brown and Warner (1985) report that . . . . At the end of the paper the complete list of references should be listed as follows:
For journal articles:
Brown, S. and J. Warner. "Using Daily Stock Returns: The Case of Event Studies." Journal of Financial Economics, 14 (March 1985), 1-31.
For magazines:
Farrell, C. "Where Will Merger Mania Strike Next?," Business Week, Number 3138 (December 18, 1989), 32-33.
For newspapers:
Torres, C. "Leverage: Trading Firm's Hidden Asset," Wall Street Journal (August 21, 1992) Midwest ed., C1-C2.
For books:
Smith, J., P. Doe, and D. Rose, Jr. References: A Guide to Format. (New York: Publishers, Inc., 1982).
For contributions to collective works:
Grossman, S. and O. Hart, "Corporate Financial Structure and Managerial Incentives," in J. J. McCall, ed.: The Economics of Information and Uncertainty (Chicago: University of Chicago Press, 1982).
Footnotes in the text must be numbered and typed at the bottom of the page where the footnote is made or on a separate page following the text (i.e., endnote). A footnote or endnote should be used to clarify the text, define terms, make comments, or to list additional sources. Footnotes provide additional information that would detract from the subject being discussed in the body of the text.
A. Economic Analysis of World & individual countries
B. Economic Analysis and Predictions for U.S.
C. Conclusions about GDP
1. WHAT ARE THE KEY VARIABLES THAT WILL DRIVE GDP?
2. WHAT EVENT(S) COULD ALTER YOUR PREDICTION OF GDP?
3. HOW IMPORTANT IS ECONOMIC ANALYSIS TO BEING A GOOD INVESTOR?
OUTLINE OF INDUSTRY AND COMPANY ANALYSIS FOR 28-732
I. Introduction
II. INDUSTRY ANALYSIS
III. Historical Company Performance (Ratio Analysis)
IV. Internal Analysis
V. External Analysis
VI. Risk Analysis
VII. Valuation of Common Stock
A. Implied growth rate, g = Required Rate - Dividend Yield or g = required rate - (Dividend payout/price-to-earnings)
B. Intrinsic value of Stock compared to market
C. Price-to-Earnings Analysis
1. Compared to Market and Industry
2. Actual company PE to Predicted
VIII. Conclusions
Description and Outline for Investing across the Life-Cycle
Purpose: The purpose of this project is to develop investment strategies for individuals who have different investment goals. This is accomplished by requiring the student to allocate $100,000 each to three different investors. Background: On June 5, 1997 Charles Austin Vaughnn died leaving each of his three cousins $100,000 as an inheritance. This week, the three cousins have come to you for advice on how they should invest their inheritance.
Instructions: The objective of this project is for you to determine how each cousin's inheritance should be invested given each client's current financial situation and investment goals. Further, each cousin's investment strategy should be discussed in detail. The current investment environment is relevant to the allocation of these funds. At least five current articles should be cited and properly referenced to support your recommendations. Listing specific companies or mutual funds is not required; however, specific companies or funds can be used as examples of the type of investments you are recommending. What is required is the type of investment vehicle (e.g., growth stock, balanced mutual fund, AAA bonds, etc.).
Requirements: Write a brief description of each cousin include current income, expenses and net worth for each of the three cousins that have come to you for financial advise. Make any additional assumptions you feel necessary within the confines of the project description and the current economic situation. However, the impact of each assumption on your recommendations should be discussed in the paper.
Pick one cousin from each of the following three groups:
Group 2: Family with children: Click here to see an example from undergraduate course--Susie
Group 3: Retired with no major commitments: Click here to see an example from undergraduate course--Agnes
I. Introduction to Investment Strategy Project Describe each cousin's financial situation
II. Client Evaluation and Recommendation
C. EVALUATION AND ALLOCATION OF INVESTMENT ALTERNATIVES.
Describe how each client should evaluate alternative financial assets. Discuss the overall risk level for each client relative to each other. Suggest a blend of investment vehicles that will provide a diversified portfolio (i.e., Cash, Stock, Bonds, other). How would the blend and risk of a thirty-something couple's retirement portfolio differ from their education portfolio (assume they are saving for the college education for their 10 and 7 year old children).
D. SELECTION. What is the main criteria used to select the assets for each client's portfolio? Describe each investor's relative level of risk aversion in terms of a range for beta and bond rating. Are short selling, margin accounts or derivative securities appropriate? Provide support from the financial press for your recommendations.
E. RECOMMENDATIONS. Specify the recommended investments for each client by discussing the selection criteria for each investment. Summarize your recommendations in Worksheet 2.
F. MONITORING THE PORTFOLIO. Discuss how each investor will be managing their portfolio. How would you suggest that each client monitor their portfolio(s)? What is the criteria for selling assets?
III. Conclusions
IV. Appendixes: Worksheet 1 and 2 (you can use one's provided or create your own). Any additional information, graphs or tables that support your recommendations.
Organizational Format, Spelling, Grammar, and Clarity of Writing Style
Be sure to provide support for your recommendations or a discussion explaining why you disagree with recommendations by the financial press. Information obtained from television broadcasts will count as a citation; however, you are limited to one of these (e.g., Wall Street Week, Fridays at 8:30 p.m. on PBS; or National Business Review, weekdays at 5:30 p.m. also on PBS or CNBC programs). However, when using a non-published source, you must have the speakers full name, credentials and current position.
Guidelines for written report for Investment Strategy Project
This paper requires the analysis of 10 mutual funds from at least 3 different fund type categories. The fund types must include bond fund and international funds. The purpose of this paper is to estimate the risk-return relationships of associated with the funds. A comparison of all the costs involved in investing in those funds; e.g., all loads, 12(b)1 fees, operating expenses and fees is also required.
I. Introduction
II. Historical Returns, Costs and Risk
III. Performance Measures for each of the stock funds
IV. Conclusions