August 08, 2010
Mr. Saif Rahman
School of Business
North South University
Subject: Letter of transmittal
Dear Mr. Saif Rahman
Here is the term paper on investment analysis & portfolio management from 31st may to 1st august.
Now you will see that we have collected stock information and calculate relative things to evaluate our performance. We think that if anybody want to invest in the DSE , this term paper can help them to make decision whether or not they will invest or not and what strategy should they follow. Finally, we are also very much satisfied to have the scope of doing this investment which gave us the practical flavor like working in a real workplace.
We really hope that you will enjoy reading our term paper as much as we had enjoyed doing it. Thank you very much, for giving us such an opportunity to complete such an interesting term paper.
073 442 030
M. Ashikur Rahman
081 076 530
081 256 030
M. Shafayet Hassan
081 305 030
We would like to thank all the authors of the journals, books and articles that are secondary sources from where we have collected necessary information regarding our term paper. Also we would like to thank the fellow classmates who helped us when we faced any problem.
Our report was the endeavor of a great experience on both the practical and the theoretical field of portfolio investment simulation. The completion of the project was much owing to our instructor Saif Rahman. It is through his viewpoint that a prolonged part of the report could be completed. We give our utmost gratitude and respect to our honorable instructor for giving us his prolonged time behind teaching us every step in developing this report. Without his support and advices this report could not have been completed so successfully, timely and completed with accuracy as we predict.
All of our team members have put their greatest efforts to the finishing of the project with such devotion, target, energy and their participation that is possible. This report was thus a combined effort and therefore all the credit of our accomplishment spreads to all the helping hand of the participants.
This paper constitutes the maintenance of an efficient portfolio of stocks, dedicated to investors who are willing to invest in the Dhaka Stock Exchange (DSE). The duration of the portfolio was for two months starting from 31st May 2010 till 1st August 2010. The initial investment consisted of 10, 00,000 BDT with a preset condition of maximum limit of 1, 00,000 BDT on a particular stock. That is, a maximum of 10% of the total investment could be allocated on any stock to ensure proper diversification of the portfolio, presenting a risk free investment for the investors.
After the initial investment which was the first phase, there were another two phase. At the first phase, statistical analysis of the stocks in the portfolio, for instance correlation and covariance, presented some investment drawbacks which resulted in the investment on some new stocks by generating cash from the sale of some existing stocks for the initial portfolio. Although the stocks generated a return of 4.52% but the positive correlation among the stocks were alarming indicators of improper diversification. The new portfolio continued through the second phase till the end. The second portfolio was continued to third portfolio without any change because of the current market situation and different trading strategies insist us to do this. In the second phase other than some few stocks like BATBC and DBH all other stocks generated very little capital gain and even some had negative return. Therefore it was necessary for the stocks to reach its full potential of and by the end of the third phase the portfolio generated 16.22% return...
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