Your assignment should contain information on portfolio’s
performance in terms of return and risk, for the
investment period and annualized (numbers), benchmark and relative to benchmark
performance,
composition of the portfolio and strategy description.
In your written analysis, you may want to consider some of the following
issues.
• What was your portfolio performance in the context of portfolio theory or
equilibrium pricing theory?
• What was the source of your portfolio’s performance – systematic or
unsystematic risk?
• How were derivatives used in your portfolio? Hedging? Speculating?
• What degree of interest rate risk exposure did your portfolio have?
• What trades would you do differently with the information you have now
learned in FIN 4504? This
does not mean what trades you regret simply because you lost money. Instead, knowing
what you now
know from FIN 4504, how would you approach this exercise (or your real
portfolio) differently in the
future?
• Given what you know about market efficiency, were your profits/losses due to
skill, luck, balance of
risk and return, insider information, …? If you conclude that you are one of
most skilled traders in the
world, you must be able to justify such a statement. Otherwise, to what do you
attribute your portfolio’s
performance?
Do not
answer these questions
one-by-one. Rather, your
well-written analysis will
address these issues
collectively. Your analysis should
be well-organized with
an introduction, body,
and conclusion. There
should be a central thesis or theme to your write-up.
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