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Your written analysis should be limited to two double-spaced, typewritten pages. You may add a small number of tables or figures on additional pages to help make your point.
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 now. This does not mean what trades you regret simply because you lost money. Instead, knowing what you now know, 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.
Also, do not write a list of sentences for every trade that you made. You may want to pick out several trades that stand out and talk about others as a group. You might want to discuss your overall portfolio, identifying only a handful of trades as specific examples. The central idea of your written report should relate portfolio management principles (risk, return, and diversification), to how your portfolio actually performed.