Bid-ask In the Market-Class investment game, my trades were not affected by a
spread consideration of bid-ask spreads.
There are no transaction fees within the simulation (Bonner et al., 2015).
My team once conducted 23 transactions in a single round (year 2022). In
real-life trading, this is a problem of excessive trading and could worsen
our financial situations. With costs taken into account, it is essential not to
take price fluctuation as the only consideration and a more prudent
approach should be deployed in every decision. The stock brokers, like
Interactive Brokers or Saxo Bank, use bid ask spreads at most assets and
apply commissions. The CFD brokers, like eToro or Plus500, quote a final
spread and incorporate their fees into them. In real markets, the bid-ask
spread is the key in buying a security for the best possible price.
There are no inventory carrying costs, adverse selection costs or order
processing costs in the Market Class game. Moreover, all the data and
news are within the simulator (Bonner et al., 2015). They are always given
at the beginning of each round publicly. Every teams know the same
information, there is no private information, no team is better informed
than any other teams. Risks that could arise within the Market Class
simulation include business risk, market risk, financial risk and country risk
(Bonner et al., 2015). My team was not exposed to the inventory risk,
option effect or asymmetric information risk, which are the determinants
of the bid-ask spread.
Portfolio In general, my team followed the standard portfolio management closely.
management Some changes were made during the monitoring and rebalancing stage
process (Feedback step), leading to changes in investments strategies and
portfolio selection (Execution step). Our adjustments on strategies were
resulted from the team’s performance relative to the benchmark.
The Planning Step was carried out in the first team meeting (before the
simulation started). We allocated tasks to each member and outlined the
Policy Statement. The Policy Statement includes Time Horizon, Target
Asset Allocation, Diversification Policy, Rebalancing and Review,
Investment Objective, Investment Philosophy and Risk Attitude.
Execution step and Feedback step were carried out at weekly meetings
since the simulation started. As portfolio managers, team members
analysed provided information, constructed the portfolio, monitored and
evaluated the portfolio in order to achieve the objective of outperforming
the market benchmarks while being consistent with the Investment
Objective and Risk Attitude.
In general, our portfolio generates positive return with constant growth in
the first 3 rounds. The returns were 5.2%, 7.8%, 8.4% as at year-end 2019,
2020, 2021 respectively. The fund’s success could be credited mainly to
our outstanding fundamental analysis, improved diversification and high
spread consideration of bid-ask spreads.
There are no transaction fees within the simulation (Bonner et al., 2015).
My team once conducted 23 transactions in a single round (year 2022). In
real-life trading, this is a problem of excessive trading and could worsen
our financial situations. With costs taken into account, it is essential not to
take price fluctuation as the only consideration and a more prudent
approach should be deployed in every decision. The stock brokers, like
Interactive Brokers or Saxo Bank, use bid ask spreads at most assets and
apply commissions. The CFD brokers, like eToro or Plus500, quote a final
spread and incorporate their fees into them. In real markets, the bid-ask
spread is the key in buying a security for the best possible price.
There are no inventory carrying costs, adverse selection costs or order
processing costs in the Market Class game. Moreover, all the data and
news are within the simulator (Bonner et al., 2015). They are always given
at the beginning of each round publicly. Every teams know the same
information, there is no private information, no team is better informed
than any other teams. Risks that could arise within the Market Class
simulation include business risk, market risk, financial risk and country risk
(Bonner et al., 2015). My team was not exposed to the inventory risk,
option effect or asymmetric information risk, which are the determinants
of the bid-ask spread.
Portfolio In general, my team followed the standard portfolio management closely.
management Some changes were made during the monitoring and rebalancing stage
process (Feedback step), leading to changes in investments strategies and
portfolio selection (Execution step). Our adjustments on strategies were
resulted from the team’s performance relative to the benchmark.
The Planning Step was carried out in the first team meeting (before the
simulation started). We allocated tasks to each member and outlined the
Policy Statement. The Policy Statement includes Time Horizon, Target
Asset Allocation, Diversification Policy, Rebalancing and Review,
Investment Objective, Investment Philosophy and Risk Attitude.
Execution step and Feedback step were carried out at weekly meetings
since the simulation started. As portfolio managers, team members
analysed provided information, constructed the portfolio, monitored and
evaluated the portfolio in order to achieve the objective of outperforming
the market benchmarks while being consistent with the Investment
Objective and Risk Attitude.
In general, our portfolio generates positive return with constant growth in
the first 3 rounds. The returns were 5.2%, 7.8%, 8.4% as at year-end 2019,
2020, 2021 respectively. The fund’s success could be credited mainly to
our outstanding fundamental analysis, improved diversification and high
