Assignment 4 Assignment 4, which is worth 15 percent of your total grade for the course, is made up of EITHER a term paper OR an investment project. You must decide early in the course (approximately Week 5, or after completion of Unit 1) which option you plan to pursue, and you may NOT switch to the other option after submission of Assignment 1. You must achieve a grade of at least 50 percent on Assignment 4. If you do not achieve this grade, you must revise and resubmit it within two weeks. Failure to do so will result in a failure in the course, regardless of the grades you receive for the other assignments and the final examination. [NOTE that you cannot resubmit from this page—if instructed to resubmit, you must go to the assignment titled “Assignment 4 Resubmission”].

 Assignment 4, Option 1: Term Paper—Requirements

 The topic of the term paper must fall in the field of investment.

 Make sure your term paper has a theme, discusses your chosen topic thoroughly, expresses your original view clearly, and makes contributions to the field of investments.

 The paper can be theoretical, empirical, or a survey on investment practice or on an investment instrument.

 Your paper should not exceed 20 pages in length (excluding references and appendices.)

 The writing style must follow the Journal of Finance. (Check the AU Library to find an electronic copy of the Journal.)1

 Your paper must be free of grammar or spelling errors. Each grammar or spelling error may cost you one percent of the total grade assigned for the project, and deductions of marks due to grammar or spelling errors will be accumulated. Check the Athabasca University Write Site if you need help.

 Your paper must be written individually—no collaboration is allowed.

 Plagiarism in any shape or form will be dealt with according to pertinent Athabasca University policies.

Include your student ID number and contact information on the top page of your assignment. If you have any questions about Assignment 4, contact the Student Support Centre. Assignment 4, Option 2: Investment Project—Requirements Imagine that you have inherited a large sum of money. After paying off debts and making some lifestyle purchases (house, car, vacation, RRSPs, and the like), you decide to invest $500,000 in the stock market. Between the start of your course and the fifth week of your studies, you must decide what stocks you would purchase. Consider the short- and long-term goals for your portfolio and which of the following styles you would use to manage it:

 Diversified international equity fund

 Diversified North American equity fund

 Diversified Canadian growth fund

 Ethical investment fund (international, North American, or Canadian).

To get an idea of the investments that typically comprise each of these types of funds, you might want to check some of the established mutual funds Web sites, which often have general listings. Do not copy them—this is your portfolio, so customize it to your needs. Sometime between weeks 5 and 14, you should begin the investment project by “buying” shares of companies to constitute your portfolio. Although the period that makes up the investment exercise itself is short (roughly 10 weeks), you should view your investment horizon as long term. If you wish to complete this course in less than 26 weeks, you may begin the portfolio investment project earlier than week 5. However, it is important to note that this project is closely linked to the course lessons. Your success in this project depends on your understanding of the material in the textbook chapters. Your ability to understand material may be compromised if you rush through the lessons; likewise, your ability to successfully complete the project may be compromised if you fail to pace it to the course lessons. You should use Excel spreadsheets to record, track, and manage your portfolio. You will find Web sites such as finance.yahoo.com and www.globeinvestor.com excellent resources for this exercise. You may trade ONLY on North American exchanges and you may NOT trade in mutual funds, bonds, or futures. During the project period, you must do at least one short sale and trade two options. If you elect to trade in the US market, there may be foreign exchange issues to consider. All purchases or sales should be justified based on your investment objectives and investment policy. As well, trades should take into account the economic analysis you undertook in Assignment 1, Part B. The objective of this project is not necessarily to maximize return, but to demonstrate your

understanding of management techniques appropriate for the type of portfolio constructed. Accordingly, the project report must

 state an investment objective that can be measured numerically.

 discuss how your investment portfolio is formed. For example, you may use the spreadsheet model in section 6.10 of chapter 6 to generate the efficient frontier.

 include all necessary statistics and computing processing, such as expected returns, standard deviations, covariance, beta, and measures for portfolio performance. These statistics and calculations may be included in an appendix to your report.

 record all transaction details of your investments.

 be free of grammar or spelling errors. Each grammar or spelling error may cost you one percent of the total grade assigned for the project, and deductions of marks due to grammar or spelling errors will be accumulated. Check the Athabasca University Write Site if you need help.

 Include your student ID number and contact information on the top page of your assignment. If you have any questions about Assignment 4, contact the Student Support Centre.

1To access the Journal of Finance, go the Library webpage. Click Databases on the left-hand side of the screen. Click AU Journal Title List. Type in “Journal of Finance.” Select the Journal of Finance (New York)–JSTOR Arts and Sciences I Collection. Choose 2000-2009. Here you will find links to examples of Journal of Finance style.