Initial Investment = Tk 40,00,000

We construct portfolios which includes-

•25% equity investment & hold securities.

•25% equity investment& buy or sell securities

•12.5% equity investment & hold securities and 12.5% investment in FDR @10%

•50% equity investment & buy or sell securities and 12.5% investment in FDR @10%

Portfolio A

June

Share Price

Company

Amount to be invested

Share Price

Share Purchase

July

August

September

October

ACI Limited

200000

80.7

2478

68.4

75.1

74

72

Beximco Pharmaceuticals

200000

89.3

2240

70.8

75.8

74.2

70.9

Bangla Process

200000

130

1538

135

135

130.75

140

Imam Button

200000

68.5

2920

54.75

54.25

55

51.25

Square Pharmaceuticals

200000

3679.5

54

3187.75

2853.5

2802.25

2616

Total Value of equity investment

1000000

868901

877075

893631

914442

In 'portfolio A' we invest 25% in equity securities of five pharmaceutical companies. We invest equal amount in each company and hold the securities till October and we saw that portfolio value decreased from its initial investment.

Portfolio B

July

Company

Amount to be invested

Share Price (Beginning)

Share Purchase

Share Price (Closing)

MV at the end of month

ACI Limited

200000

80.7

2478

80

198265.18

Beximco Pharmaceuticals

200000

89.3

2240

70.8

158566.63

Bangla Process

200000

130

1538

135

207692.31

Imam Button

200000

68.5

2920

54.75

159854.01

Square Pharmaceuticals

200000

3679.5

54

3680

200027.18

Total Value of equity investment

924405.31

August

Company

Amount to be invested

Share Price

Share Purchase

Share Price (Closing)

MV at the end of month

Kohinoor Chemicals

184881

625

296

644

190501.45

Beximco Pharmaceuticals

184881

70.8

2611

76

198459.90

Bangla Process

184881

135

1369

140

191728.51

Imam Button

184881

54.75

3377

66.25

223714.53

Square Pharmaceuticals

184881

3680

50

3369

169256.60

Total Value of equity investment

973660.98

September

Company

Amount to be invested

Share Price

Share Purchase

Share Price (Closing)

MV at the end of month

Kohinoor Chemicals

194732

644

302

644

194732.20

Pharma Aids

194732

294

662

410

271565.31

Bangla Process

194732

140

1391

140

194732.20

Imam Button

194732

66.25

2939

64

188118.65

Square Pharmaceuticals

194732

3369

58

3225

186408.83

Total Value of equity investment

1035557.18

October

Company

Amount to be invested

Share Price

Share Purchase

Share Price (Closing)

MV at the end of month

Kohinoor Chemicals

207111

644

322

665

213865.07

Pharma Aids

207111

410

505

463.25

234010.66

Bangla Process

207111

140

1479

145

214508.27

Imam Button

207111

64

3236

55

177986.39

Glaxo SmithKline

207111

170.2

1217

178.4

217089.78

Total Value of equity investment

1057460.17

In 'portfolio B' we invest 25% in equity securities of five pharmaceutical companies. We invest equal amount in each company and follow the strategy of buy and sell. We sell the securities that had decreasing price trend and buy securities that had increasing price trend. We saw that portfolio value slightly increased from its initial investment.

Portfolio C

June

July

August

September

October

Company

Amount to be invested

Share Price

Share Purchase

Share Price

Share Price

Share Price

Share Price

ACI Limited

100000

80.7

1239

68.4

75.1

74

72

Beximco Pharmaceuticals

100000

89.3

1120

70.8

75.8

74.2

70.9

Bangla Process

100000

130

769

135

135

130.75

140

Imam Button

100000

68.5

1460

54.75

54.25

55

51.25

Square Pharmaceuticals

100000

3679.5

27

3187.75

2853.5

2802.25

2616

Total Value of equity investment

500000

434450

438537.67

431816

422221

Investment in FDR

Amount

500000

Rate

0.14

June

July

August

September

October

Value of FDR Investment

505867.5

511803.8

517809.9

523886.3

530034.1465

Value of Portfolio

1005867

946254.1

956347.5

955702

952255.2164

In 'portfolio C' we invest 12.5% in FDR @ 10% and 12.5% in equity securities and hold these securities till October. We observed that the value of this portfolio slightly decreased.

Portfolio D

July

Company

Amount to be invested

Share Price (Beginning)

Share Purchase

Purchase price

MV at the end of month

ACI Limited

100000

80.7

1239

80

99132.59

Beximco Pharmaceuticals

100000

89.3

1120

70.8

79283.31

Bangla Process

100000

130

769

135

103846.15

Imam Button

100000

68.5

1460

54.75

79927.01

Square Pharmaceuticals

100000

3679.5

27

3680

100013.59

Total Value of equity investment

462202.65

Investment in FDR

511803.84

Value of Portfolio

974006.50

August

Company

Amount to be invested

Share Price

Share Purchase

Purchase Price

MV at the end of month

Kohinoor Chemicals

92441

625

148

644

95250.72

Beximco Pharmaceuticals

92441

70.8

1306

76

99229.95

Bangla Process

92441

135

685

140

95864.25

Imam Button

92441

54.75

1688

66.25

111857.26

Square Pharmaceuticals

92441

3680

25

3369

84628.30

Total Value of equity investment

486830.49

Investment in FDR

517809.85

Value of Portfolio

1004640.34

September

Company

Amount to be invested

Share Price

Share Purchase

Purchase Price)

MV at the end of month

Kohinoor Chemicals

97366

644

151

644

97366.10

Pharma Aids

97366

294

331

410

135782.65

Bangla Process

97366

140

695

140

97366.10

Imam Button

97366

66.25

1470

64

94059.32

Square Pharmaceuticals

97366

3369

29

3225

93204.41

Total Value of equity investment

517778.59

Investment in FDR

523886.35

Value of Portfolio

1041664.93


October

Company

Amount to be invested

Share Price

Share Purchase

Purchase Price

MV at the end of month

Kohinoor Chemicals

103556

644

161

665

106932.53

Pharma Aids

103556

410

253

463.25

117005.33

Bangla Process

103556

140

740

145

107254.14

Imam Button

103556

64

1618

55

88993.19

Glaxo SmithKline

103556

170.2

608

178.4

108544.89

Total Value of equity investment

528730.09

Investment in EDR

530034.15

Value of Portfolio

1058764.23

In 'portfolio D' we invest 12.5% in FDR @ 10% and 12.5% in equity securities and invest equal amount in each company and follow the strategy of buy and sell. We sell the securities that had decreasing price trend and buy securities that had increasing price trend. We saw that portfolio value increased from its initial investment.

Conclusion

From the different portfolios, we can see that the portfolio B and portfolio D gives us better return than others. In fact portfolio A and portfolio C gives us negative return that means values of these portfolios are less than initial investment.

Value of Total Portfolio

= 918900.55 + 1057460.17 + 952255 + 1058764.23

= 4037379.95

Among the portfolio B and portfolio D, portfolio D gives the maximum return and the total value of the portfolio is more then that we invested.

References

  • Investment Analysis And Portfolio Management, Frank K. Reilly, Keith C. Brown
  • Managing Equity Risk: Strategies, Stock Index Future, And Portfolio Insurance
  • Fundamental of Investment, Charles P. Jones, Frank k. Reilly, Keith C. Brown
  • DSE Monthly Review (June, July, August, September, October)
  • Annual Reports of Selected Companies
  • Websites:

www.dsebd.org (Dhaka Stock Exchange)

www.secbd.org (Securities and Exchange Commission)

www.investopedia.com

www.dynaporte.com

www.in-the-money.com