Gordon Rule 2: Instructions
1. Assume you receive $150,000 to create a portfolio of securities worth $150,000 at the start.
2. Decide what financial instruments you would like to purchase. Find their current prices in the newspaper (Wall Street Journal, New York Times or on line e.g. http://money.cnn.com/data/markets/
3. Calculate your holding of each security based on current prices and your preferences.
4. Create a schedule showing the stocks or bonds purchased and the price (use the closing price of the day). Note and reference the source of your information and the date. See Attachment #1 for an example of pertinent information your schedule should contain.
5. Read chapters 13 and 14 before completing this exercise.
Provide short answers to the following questions:
6. What objectives do you have for this portfolio? Did you choose it to maximize short-term gain, long-term security or some other objective?
7. What have you done to ensure that you have a diversified portfolio of stock?
8. What have you done to reduce market risk?
9. Explain how each of the following event would affect the value of your portfolio:
a. An increase or decrease in interest rate
b. A recession
c. Rapid inflation
d. A depreciation of the U.S. dollar