The task The aim of this exercise is to increase the initial hypothetical investment as much as you can over the given time period. So to help you understand how the financial market and in particular how the stock market works, you each will be given a hypothetical £10,000 to invest in shares from the London Stock Exchange. The transaction period for this exercise will be week commencing 6th October 2008 or there soon after. In order for you to write up your report, which is to be no more than 1000 words (plus 10%), you will all sell your stocks at the closing prices as stated on the London Stock Exchange (LSE) on week ending 9th March 2009. You have complete freedom in the amount of money you invest and in the shares that you choose. The only restriction is that you do not breach the hypothetical investment of £10,000 on the initial investment spree. However, you may sell stock that has risen in value from your initial purchase thereby adding to your initial investment which you can then re-invest to buy more shares and thereby increasing the value of your initial investment. (you may also decide to diversify into commodities as well as stocks and shares – remember you have free hand in where and how much you invest!) You are expected to keep full records/logs of the stocks that you have bought, the date and price of the purchase, the date the stock was sold, if sold, the cost of buying and selling subsequent stocks. You should also record the reasons for buying or selling the stock and what risks or perceived risks you face in buying the stock(s). Think also of how you could reduce your risk through diversification, ie buying stocks that when taken to together average or reduce the overall risk you face. Cont’d When deciding which stock(s) to choose you should be aware of the following: What are your objectives? What potential do you see in the stock you are considering to invest in and why? How much money do you wish to invest in it and why? How much will it cost you to buy and sell stock and how will this affect your overall gain? How much money do you keep in cash, if any and why or why not? How will the economics of the economy affect the stock that you have chosen or are considering to buy? How will you record your share price movements and how often and how by what means will you analyse the stock? (ie will you use a spreadsheet, graphs, statistical analysis, etc?) How do you think economic news, political news, etc has affected your investment and why? Reference: London Stock Exchange (LSE) - www.londonstockexchange.com/en-gb/ BBC - www.bbc.co.uk Google - www.google.co.uk Yahoo finance – www.finance.yahoo.co.uk