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CSIS-114 Homework 5: Investment Fund Prediction and Decision Making - Prof. Eric A. Breime, Assignments of Management Information Systems

Siena CollegeManagement Information Systems
Prof. Eric A. Breimer

In this document, students are required to use a database to make investment decisions based on daily market prices of five different funds. The goal is to grow an initial $1000 investment as rapidly as possible while following three rules: making an initial investment of $1000, holding only one fund at a time, and making no more than 25 transactions for the entire year. Students must add themselves to the people table and their transactions to the transactions table, then use queries to analyze the data and determine the best times to buy and sell funds. Instructions, examples, and deliverables.

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Pre 2010

Uploaded on 08/09/2009

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CSIS-114: HW 5
Predicting the future is not good enough.
Imagine if you could predict the daily market price of 5 different investment funds for an entire
year. How rapidly could you grow an investment? Obviously, you would know exactly when the
funds will increase or decrease. Obviously, you should buy a fund when its market value is low
and sell it when its market value is high. However, making good decisions is not as easy as you
might think. Especially, when all you are given is raw data. In this homework, we will
investigate ways that you can use a database to help make good decisions.
The 3 Rules of the Game
Its January 1st 2004. You have been given a database that predicts the daily market price of 5
different investment funds for the entire year (2004). You can use the database if you follow
three rules:
1. You can only make an initial investment of $1000.
2. You can only hold one fund at a time, so if you wish to purchase a fund, you must sell all
the shares of your current fund before purchasing a new fund.
3. You can only make 25 transactions for the entire year.
Note: You can sell all your shares of a fund and you do not have to immediately buy another
fund. This might be useful if there is a time period where all the funds are decreasing.
The Goal
Try to grow you initial $1000 investment as rapidly as possible and maximize the value of your
investment at the end of the year.
Considerations
There may be one fund that grows by the highest percentage. Perhaps the best strategy is to
identify this fund and buy it at its minimum price and sell it at its maximum price.
Some of the funds may increase rapidly for a short period of time. It might be better to identify
these increases so that you can buy the funds right before they start to increase and then sell them
right before they start decreasing.
If you make multiple transactions its important to schedule them in series. Obviously, you can
not buy a fund before you sell a fund. Also, if you decide to buy a new fund, you should
consider the optimal day to sell the current fund.
pf3

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CSIS-114: HW 5

Predicting the future is not good enough.

Imagine if you could predict the daily market price of 5 different investment funds for an entire year. How rapidly could you grow an investment? Obviously, you would know exactly when the funds will increase or decrease. Obviously, you should buy a fund when its market value is low and sell it when its market value is high. However, making good decisions is not as easy as you might think. Especially, when all you are given is raw data. In this homework, we will investigate ways that you can use a database to help make good decisions. The 3 Rules of the Game Its January 1st^ 2004. You have been given a database that predicts the daily market price of 5 different investment funds for the entire year (2004). You can use the database if you follow three rules:

  1. You can only make an initial investment of $1000.
  2. You can only hold one fund at a time, so if you wish to purchase a fund, you must sell all the shares of your current fund before purchasing a new fund.
  3. You can only make 25 transactions for the entire year. Note: You can sell all your shares of a fund and you do not have to immediately buy another fund. This might be useful if there is a time period where all the funds are decreasing. The Goal Try to grow you initial $1000 investment as rapidly as possible and maximize the value of your investment at the end of the year. Considerations There may be one fund that grows by the highest percentage. Perhaps the best strategy is to identify this fund and buy it at its minimum price and sell it at its maximum price. Some of the funds may increase rapidly for a short period of time. It might be better to identify these increases so that you can buy the funds right before they start to increase and then sell them right before they start decreasing. If you make multiple transactions its important to schedule them in series. Obviously, you can not buy a fund before you sell a fund. Also, if you decide to buy a new fund, you should consider the optimal day to sell the current fund.

The Database Tables FundNames [Do Not Modify] – The name of the five funds. Used for the lookup fields. Funds [Do Not Modify] – Closing price of the five funds for each day of the year. People [Add yourself] – The names of the investors Transactions [Add your transactions] – Each row is a transaction where you specify the PID of the person who is buy/selling a fund, the amount of the purchase, the date of the purchase, and date of the sale. Queries Analysis [Must Modify] – Returns statistics for every valid transaction that leads to an investment increase. Please modify this query to help you determine when to buy and sell funds. If you modify this query, use Save As to save each version of the query.  Increase is the market price increase between the purchased data and sale date.  Percentage is the percentage increase between the purchased data and sale date.  Time is the number of days between the purchased data and sale date.  Normalized is the percentage increase divided by time, which is a good measure of how rapidly the fund is increasing over the time period. Value Increase [Do Not Modify] – Computes the value increase or decrease of each persons’ transactions. Instructions

  1. Add yourself to the People table
  2. Add your transactions to the Transactions table. a. Make sure you use your PID number. b. Specify just the purchase date and selling date
  3. Order your transactions by date.
  4. Use the Value Increase Query to determine how much your investment increased as a result of each transaction.
  5. Use the cash from the previous transaction as the amount for the next transaction (repeat for all your transactions).
  6. You can make up to 25 transactions The current database has two examples:  Dr. Breimer made three transactions and grew his investment from $1000 to $2067.  Mr. Bad Investor made three transactions and grew his investment from $1000 to $1394.