Preliminary Portfolio Assignment
August 2008
Economics 221 - Money and Banking

Portfolio Assignment - Part 1

Hollywood Stock Exchange Portfolio

The Hollywood Stock Exchange allows you to "play the movie market" by purchasing hypothetical shares of movie stocks and star bonds. Movie stocks values are attached to current and future films--and sometimes when they are just and idea or concept. Star bonds are attached to the "value" of a particular "star" at the moment. Thus the bond of a star with almost guaranteed success will yield a small return. Other less famous stars yield a higher return, since you are taking on more risk in purchasing the bond of a riskier star.

Go to the Hollywood Stock Exchange and log in. If you have never visited the Hollywood Stock Exchange before, it will be necessary for you to get a password, and you may have to wait a few minutes or a few hours before you get the password. (Don't use your BU password or one that you use for important transactions!) Once you receive your password, you can login and "play," -- which means picking a portfolio of stocks and bonds. Before you get your password you have access to information produced by the exchange including topics, a glossary of terms, news about movies (and music.) Use this time in reading through the site, looking at definitions and noting that this stock exchange works on the laws of supply and demand. When you and others purchase a stock it rises, when you sell, it falls. (See if you can figure out what gives bonds their return.)

HSX has added a music exchange to its venue. Please explore the movie exchange first, since you will be able to trade (and thus learn about) both "star" stocks and bonds. (In the music exchange you can only purchase "artiststocks."

Don't forget that this site is a commercial site--don't get distracted in the ads!

This assignment isn't about "making money" or "winning" but about observing markets. This particular market has tens of thousands of "players" and your purchases may influence this market.

1 What criteria did you use to pick your stocks and bonds? (Any criteria is fine at this point in the semester!)

2. What did you observe about the value of stocks and bonds--or the prices?

3. Watch your "portfolio" for the next week. What has happened to your portfolio? Do you have any possible explanations as to why you had these results?

In your journal, record what you found at the site, what you explored, what you learned. Print out your portfolio, and check it every week or two--adding and subtracting from it as you wish.

Please include this part of your portfolio assignment in your Journal for Money and Banking. Check in and add to it periodically during the semester.

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