MIS 470 Lpaper3 Stock Portfolio

MIS 470 Lpaper3 Stock Portfolio - THE STOCK PORTFOLIO...

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THE STOCK PORTFOLIO RESTRUCTURING 1 Case 11- The Stock Portfolio L-Paper 3 MIS 470, T 2:00-4:30 Dr. Robert Mullen May 1, 2007
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THE STOCK PORTFOLIO RESTRUCTURING 2 Case Background Holly is the new manager of the mutual fund and wants to restructure her fund using “troubled stock” buy and sell rules. The fund has several stocks that have declined in price. Holly thinks the fund needs to be restructured, and she wants to weed out stocks that are ripe for sale. With the proceeds, she will buy other stocks that appear to be undervalued in the stock market. Holly has a database with a table for stocks the fund owns, called the Owned.mdb and another table for the stocks the fund might buy, called CouldBuy.mdb. She wants to use the database and a spreadsheet to automate the portfolio restructuring. We have been called in to automate the restructuring, using an Excel spreadsheet and Access database. Description of the Problem The first problem is to get the stocks to conform to her criteria. Her rules are as follows. Holly would sell stock if its price has risen twenty-five percent or more since it was purchased. She believes that such a stock’s price will not increase in value much more and might go down in price, so sell it now and take the profit. Using that profit she would then buy stocks that are now selling for seventy-five percent or less than their highest price in the past fifty-two weeks. She thinks that a stock that has fallen that far in price would most likely only go up in price. Her strategy also has rules for industry concentrations. She does not want to put more than twenty percent of the portfolio in stocks of companies in any one industry. Yet, she wants a substantial representation. Therefore, the industry concentration must be greater than eight percent.
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THE STOCK PORTFOLIO RESTRUCTURING 3 Description of the Solution The solution will consist of using Excel formulas to identify the stocks to keep and sell. We will import the stock tables into an Excel workbook and create the formulas. The Invest database has information about the stocks currently owned, and the stocks she is considering purchasing. Owned.mdb table shows the data about the stocks portfolio. The Owned table includes the stock name, industry, shares owned, average price and market price. The industry is the type of business the company belongs. For example, the industries are, Energy Company, Utility Company, Tech Company, Consumer Company, Services Company, Mining Company and Chemical Company. The average price shows the average purchase price of the shares owned in the portfolio. The market price shows the current share price in the stock market. The Could Buy table shows the same information about the stocks as the Owned table, with the addition of a fifty-two week high field. This field shows the stocks highest market price in the last fifty-two weeks. First, we will create worksheets for the current portfolio and for the stocks that could be
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MIS 470 Lpaper3 Stock Portfolio - THE STOCK PORTFOLIO...

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