Microeconomics Project 1 Your Investment Company receives $20,000 from a group of investors (your classmates). Your firm specializes in building mutual funds only with the best and biggest American companies, so you are going to build a fund only with ordinary stocks from the companies included in the S&P 500. With that money, you bought stocks en 2 companies ($10,000 in each company) on 09-04-15 and you’ll sell it on 11-06-15 just before the investors’ big meeting (P1 due date). You are on charge of analyzing and tracking the movements and key facts of the stock price of both companies. So for each company, each Friday register the stock’s close price during the period (10 Fridays). After the stocks have been sold, you should calculate the profit (or loss) made for each company. Also, you should calculate the profit (or loss) made as mutual fund (including both companies). You will inform the investors of the mutual fund performance. They will be happy or angry depending on the quality, clarity and knowledge showed by you in the report (your paper). The investors know they can earn or lose money, so the important key in your paper is how you explain to them what happened with the market and the companies selected during the period of investment. The Investors’ report will include at least the following: 1. The reason (just economic arguments) why you chose each company (1 paragraph per company) 2. Mutual fund’s composition which means how many stocks, for each company, there are in the fund (1 pie chart or table) 3. 2 graphs showing the weekly stock price for each company (1 graph per company) 4. 1 graph showing the weekly value of the fund (the value of the mutual fund is the amount of stocks multiply by the stock price) 5. A comparison between the initial fund value and the final fund value, and how much money you earned (or lost) in dollars and in percent. (1 table with those figures) 6. An analysis of your outcome. In your opinion, why did you earn (or lose) that money? What happened with the market or with the industries involved that affected this? (2 paragraphs) 7. Given the results, analyze if it would have been better to leave the money in a CD (certificate of deposit) which paid an annual interest of 3%? The investors are very busy guys so they don’t need too many words. They need smart and clear explanations. Other Instructions: • I’ve posted the link to yahoo-finance.com but you can use any other reliable source. • The paper will be made using Microsoft Word (.doc or .docx) which may include at least the 3 graphs required. Of course additional relevant information that supports your arguments, such as pictures, graphs, data and other sources, make the investors happier.
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