Stock Portfolio

Stock Portfolio Project

The framework for financial decision-making always requires a risk and return tradeoff. The level of risk that an investor is willing to take on should be rewarded with an acceptable level of return. Conversely, a required rate of return is accompanied with a certain degree of risk that limits unreasonable returns. This project seeks to demonstrate that the world of stock investing exhibits equilibrium pricing and well-defined risk and return tradeoff for all participants.

Goals

Completion of this project should provide participants with an understanding of how equity investing is affected by stock selection, the relative risks of each stock choice, and how risk is defined and controlled through portfolio creations. Upon completion of the project, participants are expected to be familiar with concepts of rates of return along various temporal dimensions, stand-alone risk, portfolio risk, and where to locate stock performance information leading to a cursory ability to conduct equity research.

Solution

A cross section of publicly traded companies is selected by each participant as their research assignment. Individual securities are analyzed for their respective historical risk-return tradeoff performance. In Part 2 of this project, participants are grouped together to construct a well diversified portfolio of equity securities and are tasked to find an optimal portfolio construction.

Project Outline

The final set of deliverables for this analysis is a multi-page executive summary along with appendices supporting your assessments as securities analysts. The project consists of finding financial information on selected equity securities. Information about securities must be gleaned from various University of Washington subscription databases and other free internet sources.

All collected information is analyzed using a business-accepted electronic spreadsheet for ease of estimation and communication. The results of the analyses are reported, presented, and discussed.