BMGT

2112
Financial Markets and Investment
 Week 22
Assignment Workshop for
Question 2
 Assignment – Question 2
Keep an up-to-date log of every trade
you have made.
You need to include this log in the
appendix of your report.

Explain and justify the rationale for the

trades that you made during the trading
period.
 Assignment – Question 2
• You can do this by explaining why you
made the trades in relation to economic
and market conditions at that time and
relevant financial theories and how you
hoped the trade would contribute to
the portfolio.
• That is its contribution to risk, return
and diversification of the portfolio.
 Assignment – Question 2
• Word allowance = 1,500 words for
question 2.

• Remember if you are short of words

– you can include some data and
discussion in your appendix and
refer to it in the main body of your
assignment.
 Assignment – Question 2
• For each trade you made you need to
relate this to the effect you hope this
trade will have on risk, return and
diversification.
• Then you need to evaluate whether it
achieved what you had hoped?
• What was the effect of this trade on
risk, return and diversification?
 Assignment – Question 2
• Time frame for this discussion – this
could be immediately you made the
decision and your portfolio then
changed.

• Could be by the following week, weeks

or from the valuation at the end of the
period or all of the above.
 Assignment – Question 2
• When you made a choice regarding a trade
you will have researched the company’s
financial information, the bond’s
performance, or the past performance of
the index.
• You will have compared these to your
client’s risk/return requirements.
• What was it about the
company/bond/index that attracted you to
trade in it?
 Assignment – Question 2
• When was their next dividend payment
or if a bond the coupon payment?
• Anything interesting happening within
this company such as new product
launch, joint venture, merger etc?
• What affect did you think this would
have on your investment?
• Could refer to financial theory to
support this discussion.
 Assignment – Question 2
• You need to think about what news or event
are you basing your buying decision on?
• How does this fit in with the rest of the
portfolio in relation to its contribution to the
portfolio’s diversification, risk and return.
• How does it fit in with your strategy/vision
for the portfolio?
• Does it fit in with your client’s needs and
their constraints such as time horizon and
risk tolerance?
 Assignment – Question 2
• When making a trade what were the
main economic events or news items?
• How might these effect your trading
decision and your portfolio?
• What is happening to interest rates and
the inter bank rates in the countries
that your investments are based?
 Assignment – Question 2
• When the values of your investments
change explain why you think they are
changing.
• You need to consider what factors are
influencing the changes in value.
• Example, is the foreign exchange rate
the biggest factor that explains the
change?
• If so, you need to discuss this.
 Assignment – Question 2
• Once you have made a trade you need
to consider your strategy.
• You need to consider what to do next
and when to do it.
• Example, do you get out at 10%, 20%
etc?
Assignment – Question 2

Any questions about

Question 2 of the
assignment?