Investment Simulation This outline is a guideline and/or suggestion. Please don’t limit yourself to working inside the box! Reference the appropriate information/support in the appendix and provide notes on the slides so it is easy for me to understand the point of each slide and the location of any supporting detail. Make sure to provide appropriate references (footnotes) for any material and analysis you used in the process of preparing your strategy. The goal is to demonstrate expertise and skill in designing, implementing, and executing your strategy.

General Assignment HCEMBA Investment Simulation Assume that each group has $1,000,000 to invest. Your portfolio will be managed via stocktrak, a global portfolio simulation web site. The situation is as follows: Hypothetically, the funds are contributed equally from the group members, or you may create a ifferent scenario for a specific person or group. Important that the goals, objectives, and portfolio are aligned with the investor(s). Your investment horizon should be determined by the group. Two months is an unrealistic time frame…i.e., your investments will be judged on merits, not performance over a short time period. 1.Identify the objectives of the group and prepare an abbreviated IPS (time horizon, liquidity, return, and risk) 2.Prepare a brief economic outlook. Discuss how the outlook influenced your asset allocation decisions among stocks, bonds, other asset classes, domestic or international. 3.Your investments must include at least one Exchange Traded Fund. 4.Your investments must include exposure to the bond market (10-60% of portfolio). 5.Report some level of valuation for your investments and/or the market. Does the market valuation represent fair value and is expected to provide adequate return for the given risk? Are the specific sectors, or stocks selling at a reasonable value? Does this matter to you? (i.e., what is your style of investing). Discuss how this analysis influenced your investments. 6.Report the final investments held in your portfolio 7.Lessons learned Deliverables:Powerpoint presentation with slides addressing #1-7 above. Provide notes on your slides to to the extent necessary for grading. Attach any analysis in the appendix. Check the class website for the due date. You may decide to trade in the account and this is fine. And we may look at the accounts to see how the groups are progressing. However, the project is graded on your approach and final composition of the portfolio, and addressing 1-7 above.

Grading is based on: - Completion of core requirements (1-7 noted above). Asset Allocation, types of trades, diversification of asset allocation, security selection if appropriate. –Do you feel the selections you made and the investment strategies you took were appropriate given the investment objectives and target risk/return goals that you selected? –What specific steps did you take during the quarter to attempt to adjust your portfolio to better achieve your target? How successful were these steps? –Did you learn anything about short-term trading? Market timing? Trading on news? Economic indicators? -Overall integration, design, and management of the portfolio outside of specific strategies and core requirements. -Use of concepts from course material. More is better. -Support for your portfolio strategies (i.e., if you are taking the position of a bull market, you must support it with details). -Final Slides. Style, professional approach. Also, can an investor easily read through your presentation material and come away with a good understanding of your strategy, style and success. If you had to do it all over again, would you change your investment objectives and strategy in any way? If not, why? If yes, how? Deliverables - hard copy of the power-point presentation and supporting Appendices.

Table of Contents-Investment Simulation 1.Executive Summary –Objectives, Economy, Strategy/Style, Allocation, and Portfolio 2.Investment Policy Statement/Goals and Objectives Risk Return Time Horizon Liquidity Needs Tax 3.Capital Markets Expectations Economy and Markets Short-Term and long term Time Horizon 4.Resulting Strategy/Style Approach Asset Allocation Security Selection –Methodology and valuation support 5.Lessons Learned 6.Appendix-Supporting Data, Research, and Spread Sheets 1-3 Slides 2-3 Slides + Appendix 1 Slide 1-2 Slides Table of contents is a required slide 2-4 Slides + Appendix

Appendix Note that there are only two required slides in the appendix. The rest of the slides include models that may be useful to you.

6 Modifying Historical Capital Market Expectations Economic Category Economic Conclusion Bond OutcomeEquity OutcomeAlternative Outcome Consumer Business Government Central Bank Inflation Housing Other Required slide

7 Modifying Historical Capital Market Expectations-From Previous Page Asset ClassMean Annual ReturnsForecast +/- Standard Deviation Forecast +- US equity International Developed International Emerging US Govt Bonds US Corporate IG US Corporate HY Int. Sovereign Bonds US Real Estate Commodities Other Required slide

Dividend Discount Model

Valuation Methodology

Free Cash Flow Model

Corporate Valuation Model

Portfolio Tracking

Example of Alpha and tracking error