The intent of this paper is to look at how markets work. Congratulations, you have just won the lottery and received $150,000. You are to spend all or as close to $150,000 on 5 different stocks or mutual funds (no bonds, commodities, cash or certificate of deposits) and broker's fees (1/2% of 1% of the value of the transaction). You may have a small cash account due to the event that your stock purchases and broker's fees do not equal $150,000. You will not earn interest on this cash account. This account must be less than the lowest price of one share of stock and broker's fees. You hold your stocks you can shift your holdings among the 5 stocks and mutual funds or purchase different stocks or mutual funds. You must maintain a portfolio with 5 different stocks or mutual funds at ALL times. You will sell your stocks or mutual funds. It is your responsibility to keep track of each transaction date, purchase price, sale price, quantity of shares bought, and sold and the broker's fees.
Your paper must include:
a. The names of the companies and why you purchased these companies' stocks or funds
b. Tell me any interesting happenings concerning each company you own shares of stock inwithin the 10 weeks you held the stocks. This requires researching your companies. (I do not want stock price information)
c. If you trade any stocks during the 10 weeks, tell me why you chose to do so. If you hold onto your stocks the entire 10 weeks, tell me why you chose to do so.
d. As an economist, what good do you think each of your companies have a comparative advantage in? Why?
e. What would an economist say was the cause of the price of your stock rising, falling or staying the same? Be specific regarding the determinants of supply and/or demand.
f. Do you think consumers would be responsive or unresponsive to a change in the price of the product each of your companies produce? Why or why not? If the government placed an excise tax on the good or service, who would bear the burden of the tax? Why?
g. Do you think the equilibrium price of the product each of your companies produce is the socially optimum equilibrium price? Why or why not?
h. Identify which market structure each company would belong in. Why?
i. What do you think about the future of each company? This is an analysis of your companies. One cannot tell the future of a company from the current stock price. You need to research your companies.
j. A profit/loss statement (this is a financial statement) in table format!!! You must include all relevant data including: purchase date, number of shares purchased, expenditures on stocks/mutual funds, broker's fees, sale date, number of shares sold, total revenue, broker's fees, and profit. I want you to present the data in an easy to follow table. This means I want columns and data NO GRAPHS, PIE CHARTS, BAR GRAPHS, ETC.