Module 6.1 Putting aside opinions you may have regarding humane issues, consider that sleep deprivation has been used as a means of torture for many years. What are its primary effects, and why would these effects be considered useful in interrogation? 6.2 System Admin Max Points: 6.0 What is the most significant effect of injuries to or abnormalities in the hypothalamus on behavior? Why is this effect the most significant? Zhou 1 Investment Policy Statement This IPS is designed for a young investor less than a 28 years old with the investment beliefs and principles. The primary objective of this investment policy statement is mainly aimed to monitor portfolio allocation against holding limits, and to consider personal situation make revisions to portfolio. What’s more, the main objective is mainly to achieve long term growth which is based on price appreciation. The purpose of the portfolio is to target annual returns of 12%. The annual and targeted allocation in order to target the return would be 60% stocks, 30% bonds and 10% cash. The portfolio’s rate of return is not guaranteed for the future investment and therefore, future returns may change over time. The portfolio will be rebalanced on annual basis. By using the five-year annual data for the different assets, investment holding period will be determined through annual review, efficient frontier and when an assent is inefficient, it will be replaced. Stock-Trak Portfolio Report Investments Policy Statement for 25-year-old Funds are going to be in are going to be invested in higher to moderate-risk investment opportunities that has equally greater to lower risk such as the NASDAQ and S&P 500, therefore, the investor seeks an annual return from this investment of approximately 12%. In order to achieve the target return, 40% equity in mid/small-cap stocks and 20% in International stock. 30% of the portfolio is to be Inter-Term Government Bonds and Corporate Bonds. The remaining 10% are going to held in cash. Actual asset allocation will be allowed to vary within a reasonable range of plus or minus an absolute 5 percent or 15 percent of the target asset allocation. The portfolio is going to be rebalanced when actual asset allocation over the reasonable range. Name: Ying Wang Stock-Trak Report Summary of Investment policy Risk: Risk Averse Time Horizon: Long-term Portfolio Selection: Cash, equities and bonds Shortw-term liquidity need: Yes Portfolio Selection Rationale According to modern finance theory, an efficient portfolio earns highest expected returns under certain risks and has lowest risks under certain expected returns. Because I am risk averse, my expectation is to beat inflation. I only invest 32% of money in equity and bond market. My portfolio includes 68% of cash, 21% of S&P 500 ETF (SPY), 8% of Vanguard bond market ETF (BND) and 3% of Antero Resources Corporation (AR). For equity investment, I mainly follow passive investment strategy. S&P 500 index E ...

1. Module 6.1
Putting aside opinions you may have regarding humane issues,
consider that sleep deprivation has been used as a means of
torture for many years. What are its primary effects, and why
would these effects be considered useful in interrogation?
6.2
System Admin
Max Points: 6.0
What is the most significant effect of injuries to or
abnormalities in the hypothalamus on behavior? Why is this
effect the most significant?
Zhou 1
Investment Policy Statement
This IPS is designed for a young investor less than a 28 years
old with the investment beliefs and principles. The primary
objective of this investment policy statement is mainly aimed to
monitor portfolio allocation against holding limits, and to
consider personal situation make revisions to portfolio. What’s
more, the main objective is mainly to achieve long term growth
which is based on price appreciation. The purpose of the
portfolio is to target annual returns of 12%. The annual and
targeted allocation in order to target the return would be 60%
stocks, 30% bonds and 10% cash. The portfolio’s rate of return

2. is not guaranteed for the future investment and therefore, future
returns may change over time. The portfolio will be rebalanced
on annual basis. By using the five-year annual data for the
different assets, investment holding period will be determined
through annual review, efficient frontier and when an assent is
inefficient, it will be replaced.
Stock-Trak Portfolio Report
Investments Policy Statement for 25-year-old
Funds are going to be in are going to be invested in higher to
moderate-risk investment opportunities that has equally greater
to lower risk such as the NASDAQ and S&P 500, therefore, the
investor seeks an annual return from this investment of
approximately 12%. In order to achieve the target return, 40%
equity in mid/small-cap stocks and 20% in International stock.
30% of the portfolio is to be Inter-Term Government Bonds and
Corporate Bonds. The remaining 10% are going to held in cash.
Actual asset allocation will be allowed to vary within a
reasonable range of plus or minus an absolute 5 percent or 15
percent of the target asset allocation. The portfolio is going to
be rebalanced when actual asset allocation over the reasonable
range.
Name: Ying Wang
Stock-Trak Report
Summary of Investment policy
Risk: Risk Averse
Time Horizon: Long-term
Portfolio Selection: Cash, equities and bonds
Shortw-term liquidity need: Yes
Portfolio Selection Rationale

3. According to modern finance theory, an efficient portfolio
earns highest expected returns under certain risks and has
lowest risks under certain expected returns. Because I am risk
averse, my expectation is to beat inflation. I only invest 32% of
money in equity and bond market. My portfolio includes 68% of
cash, 21% of S&P 500 ETF (SPY), 8% of Vanguard bond
market ETF (BND) and 3% of Antero Resources Corporation
(AR).
For equity investment, I mainly follow passive investment
strategy. S&P 500 index ETF (SPY) is to replicate performance
of S&P 500 companies. This index composite is a well-
diversified portfolio and widely used as a relevant benchmark
for portfolio evaluation. Therefore, this ETF can be regarded as
market portfolio, which only takes systematic risk. I choose
ETF over the index fund is because ETF can be traded like
common stocks.
I also invest in Antero Resources Corporation (AR) because this
company has solid financial strength and is underpriced due to
tumbled oil price. The profitability ratios are quite strong. The
gross margin of AR is 96.73%, which beats average gross
margin of its peers (39.12%) and outperforms its industry
average gross margin (39.12%). Also, the net profit margin of
17.16% is much higher than -57.63% for peers and -28.79% for
industry average. In addition, according to Yahoo finance, the
average 1-year analysts’ forecast for AR is 31.73, which
indicates the current stock price is underpriced. According to
Stock Trak, Consensus Rating for AR is moderate buy. Among
20 analysts that covers AR, only 1 analyst recommend sell; 10
analysts recommend hold; and 12 analysts recommend buy.
For fixed income investment, I also follow passive
investment philosophy. Vanguard Total Bond Market (BND)
seeks the performance of a broad, market-weighted bond index.
The fund employs an indexing investment approach designed to
track the performance of the Barclays U.S. Aggregate Float
Adjusted Index. This index represents a wide spectrum of
public, investment-grade, taxable, fixed income securities in the

4. United States-including government, corporate, and
international dollar-denominated bonds, as well as mortgage-
backed and asset-backed securities-all with maturities of more
than 1 year.
Performance Evaluation
Table 1
Summary of performance
Portfolio
Initial value
Market value
Return
Cash
679,320
682,048.81
0.40%
S&P 500
209,490
212,080.00
1.24%
BND
82,790
83,400.00
0.74%
AR
28,400
29,340.00
3.31%
Total Value
1,000,000
1,006,868.81
0.69%
The market value of my portfolio is 1,006,868.81. The return of

5. my portfolio is only 0.69% because I hold almost 68% of money
in cash. The return of S&P 500 is 1.24% which is our
benchmark index. Therefore, my portfolio underperforms
market. The return of AR is 3.31% and the return of BND is
0.74%. The equity and fixed income portfolio (excluding cash)
returns 1.29% (65.33%*1.24+25.82%*0.74+3.31%*3.31).
Mistakes and Lessons
My portfolio is aligned with my expectation. However, my total
portfolio return is low because I only invest 32% of money and
hold 68% of cash. The Stock-Trak portfolio simulation is quite
challenging and interesting. I have learned a lot from this
practice. I am too conservative to manage my portfolio. If I redo
this portfolio investment with my actual money, I would hold
market portfolio, investing all money into S&P 500 ETF.
Surname 6
Name
Professor’s Name
Course
Date
Stock-Trak Portfolio Report
Investment Policy Statement (IPS)
Introduction
The Stock-Trak portfolio is an investment that covers various
assets ranging from stocks, bonds, mutual funds, and cash
investments. The portfolio has been created to accommodate a
set of assets with an aim of maximizing the returns while
lowering the risk exposure for the assets. The available funds
for investments will be allocated to the assets at different
proportions depending on the risks and returns relationships.
The portfolio manager is assigned the responsibility of setting

6. investment objectives and guidelines alongside the distribution
policies.
Risk Profile
The portfolio investor is willing to assume moderate risks in the
investment since the risk profile is a risk-averse. Risk-averse
investors do not assume a lot of risks for fear of losing.
Therefore, the asset selection will majorly include the less-risky
investments.
Investment Goals and Objectives
The goal of the portfolio investment is to generate the highest
possible returns with the least risk exposure. Specifically,
i. The investment will seek to preserve the purchasing power
and value of the assets in the long-term
ii. The portfolio investment will be made in both growth and
value assets available in the market.
Asset Allocation Policy
The strategic allocation strategy will be used in allocating the
available funds across the assets. Under the strategic allocation
policy, assets with varying degree of risks and returns are
selected to achieve the goals and objectives. As a long-term
investment, the portfolio value is given a priority (Reilly and
Brown 26). It is expected that there will be variations in the
stock returns and risks in the short-term due to the changing
market conditions. Finally, under the strategic allocation, a
balanced portfolio of the assets is maintained.
Diversification Policy
The portfolio comprises of assets of varying risks and returns,
both from the US and foreign markets. Diversification is key to
the achievement of the investment objectives.
Fund Allocation Strategies among Different Portfolio Assets
The following chart gives a summary of the fund's allocations
among the different assets in the Stock-Trak portfolio.
Asset Class
Sub-asset class
Target allocation
Allocated fund

7. Equity
US Equities
15%
$15,000
Non-US Equities
10%
$10,000
Bonds
US Treasury bonds
30%
$30,000
International bonds
25%
$25,000
Fixed Income
Mutual Funds
12%
$12,000
ETFs
5%
$5,000
Cash
3%
$3,000
Total
100%
$100,000
The Stock-Trak portfolio utilizes the strategic asset allocation
strategy in which a specific proportion of the assets are used in
the portfolio. The portfolio is continuously rebalanced to

8. achieve the target. The portfolio investment takes into
consideration the relationship between the risks and returns. It
is also based on the “buy and hold” strategy in which the
portfolio manager speculates the asset performance and make
necessary adjustments.
In the fund allocation presented in the above table, assets with
least risks are allocated the highest funds. This takes into
consideration of the risk profile of the investor. For example,
US Treasury bonds have the highest allocation at 30% of the
total funds available in the portfolio. Unlike the other assets,
bonds have least risk exposure in the market although the
returns are relatively lower compared to equities and fixed
income investments. Cash investments will have the least
allocation of $3,000, an equivalent of 3% of the total funds
available for investments. Fixed-income assets have medium
risk exposure and return in the portfolio; thus, the allocation of
relatively lower funds. Applying the strategic asset allocation
strategy, the proportion of funds will be adjusted based on the
prevailing economic and market conditions under the "buy and
hold" approach. The assets are held in the long-term and seek to
create value.
Rationale for Selecting the Securities in the Portfolio
The portfolio comprises of US and Non-US equities, US
Treasury bond funds, mutual, ETF, and international bonds
funds. These securities were considered in portfolio
development for a number of reasons. First, the US equities
were selected in the portfolio due to the high-risk exposure and
relatively high returns. Examples of US equities that can invest
in the portfolio include the stocks issued by large and well-
performing companies such as Google, Inc., Apple, Inc.,
Citibank Group, Facebook, and Amazon, Inc. among many
others. These securities create value in the portfolio; thus; thus,
their selection (Reilly and Brown 26). The Non-US equities are
the stock securities that are issued outside US market and are
available in the foreign exchange markets such as LSE.
Examples of such equities include Morrison International and

9. Toyota Corporation among others. These securities have high-
risk exposure and since the risk profile of the investor is
medium, their selection helps in achieving the investment goals.
The US Treasury and international bonds, unlike the equities,
have low-risk exposure and low returns. Their selection in the
portfolio is justified by the need to have a moderate risk
exposure and high returns in the long-term. The long-term
bonds will earn low returns both in the short and long-term and
together with the equities, the portfolio will yield moderate
returns and medium risks; thus, the achievement of investment
goals. Using both the US and foreign markets diversifies the
portfolio and creates value in the long –term (Reilly and Brown
26).
Considering the buy and hold strategy and the need to speculate
market performance to make relevant adjustments, the asset
selection includes the international and local bonds. The bond
performance is largely affected by the economic conditions.
Therefore, the US Treasury bonds and International bonds will
neutralize the negative effects the varying economic conditions
might have on the portfolio in the short-term. Cash investments
involve making savings deposits in the commercial banks to
earn interest over a period of 10 years.
Comparison of Portfolio Performance Relative to the
Benchmark
Compared to the market index S&P 500 as a benchmark, the
portfolio reported a better performance in terms of the returns
although there were fluctuations in the returns and risk
exposure. The portfolio had a slightly higher average returns on
the investment over the duration compared to the S&P 500
index. The high average returns is an indication of a better
performance and high value for the investors. The risk exposure
was, however, higher compared to the market index. The high-
risk exposure in the market is the cause of high returns that the
portfolio generated in the long-term. The S&P 500 index
captures the average market performance over time. During the
investment period, the market had lower yields compared to the

10. portfolio. This was due to the economic changes in the market
that negatively affected the returns and prices.
Reflection
During the Stock-Track portfolio development, it was possible
to achieve the short-term objective of low-risk exposure and
high returns. The asset selection in the portfolio shows that it
was possible to yield high returns in the short-term. However,
speculating the market trends was the most difficult part of the
simulation. Using the buy and hold strategy did not work
effectively as an accurate prediction of the stock prices was
impossible; thus, unable to achieve the target in the long-term.
The major lesson made during portfolio investment is assuming
medium risk as this resulted in low returns. From the
investment, I learned to allocate a higher proportion of the
funds into the highly risky assets to yield high returns over
time. If I were to redo the portfolio investment using the same
amount of funds, I would use the tactical asset allocation
strategy to achieve the best results.
Works Cited
Reilly, Frank K., and Keith C. Brown. Investment analysis and
portfolio management. Chapter 16: Equity Portfolio
Management Strategies. Cengage Learning, 2011.