Durham Business School :: Portfolio Simulations

Rules


1.	Trading Dates & Initial Cash Balance
	The beginning and ending dates of the trading period, as well as the initial cash balance, are specified by each professor. Please note the Stock-Trak offices will be closed on school and market holidays.

2.	Trading Times
	Stock-Trak offers several methods for you to place your trades. Before making any trades, you must be prepared with your account number, password, and the ticker symbols of the securities. Any trade made after market close will be processed the next business day. Stock-Trak is not responsible for trades that are not received or are incomplete. Students can also fax their trades in 24 hours a day. All faxed trades must be on a single sheet of paper (no cover pages please), and include your account number, password, name, buy/sell, number of shares, ticker symbols, the date and time sent, and a phone number. All fax trades are executed at closing prices. Please call the next day to confirm. If you have questions about your account, you may call for Stock-Trak customer service during our office hours (Monday to Friday from 9:30 AM to 6 PM Eastern Standard Time). When calling, please be prepared with your account number, password, and the trade confirmations that you received from the web page.

3.	Tradable Securities
	STOCKS: You can buy, sell, buy on margin, and sell short all LSE, NYSE, AMEX, and NASDAQ stocks (common and preferred) listed in the major financial publications (U.S. stocks must be $5.00 or more). You can also trade several stocks trading on the exchanges of Paris, Frankfurt, Tokyo, Hong Kong, Taiwan, Sydney, South Korea, Mexico City, and others. All stocks will be quoted in their respective currencies and converted into your account's currency based on the current exchange rates. Adjustments will not be made for any cash dividend less than £0.10 or any stock dividend less than 2%. New issues are available within several days of the initial public offering. MUTUAL FUNDS: You can trade most of the popular mutual funds. Ask your Stock-Trak broker if there is a smaller fund you are interested in; if we can get a quote on it, then you can trade it. Mutual fund purchases must be in multiples of £500. Closed end funds are traded just like stocks. Since available cash balances earn interest, we do not trade money market funds.

4.	Trading Terminology
	Many people and books use different terminology to describe the same type of transaction. To avoid any communication problems which may occur during the trading process, please refer to the following list of terms that Stock-Trak uses to place orders for various types of transactions. STOCKS: There are four basic ways in which stocks can be traded. They can be bought, sold, sold short, and covered. When "buying" a stock, you are taking a long position with the hope that the price per share will increase. "Selling" a stock refers to the closing of that long position. "Selling short" is selling a stock that you don't own (you actually borrow the stock from the broker) with the hope that you can later buy the stock back at a lower price. When you buy the stock back to close your short position, it is called "covering" your short position. You cannot hold a long and short position in a stock at the same time.

5.	Quoted Prices and Volume Restriction
	Stock, option and futures trades made on the web page will be made at 20 minute delayed prices. All other trades will be made at the "last trade" price of the security for each day. The maximum number of shares each student may trade for any security is limited to one-half of the actual volume of that security on that day. Occasionally prices vary from one quote source to another. Adjustments will not be made because of slight price discrepancies. To force some degree of diversification, students may not put more that 25% of their initial cash balance into any single stock, option, or future.

6.	Ticker Symbols
	When making trades, you must know the ticker symbol of the securities to be traded. Stock ticker symbols can be found our web page. (Most city papers show only the abbreviation of the company name, not the ticker symbol.)

7.	Commission
	A brokerage commission is applied to all transactions. The commission for most trades made on the web page is a flat £20. For trades that are not made on the web, the commission for stock trades is calculated as £50 plus £5 per 100 shares; for other trades, the commission is £50 plus £5 per contract. Commissions will be charged to both opening and closing transactions. Stock-Trak trades all mutual funds with no load.

8.	Margin Requirements
	The margin requirement for stock purchases and short sales is 50%. This means that for stock purchases you can borrow up to 50% of the total cost. For short sales, you must deposit an amount equal to 50% of the current market value of your short positions. Starting with £100,000, Stock-Trak may loan you another £100,000, making your total buying power £200,000 if you are trading marginable securities.

9.	Interest Earned
	Interest will be earned on all available cash balances and credited at the close of each day. Interest will be calculated using a money market rate, currently 3%.

10.	Interest Charged
	Interest will be charged on all loan balances and will be debited at the close of each day. The rate will be three percentage points above the money market rate.

11.	Calculation of Equity
	A portfolio's equity or value is calculated as follows: Cash - Debit bal. + Credit bal. + MV of long positions - MV of short positions where: Debit = loan balance, Credit = short sales proceeds, and MV = current market value.

12.	Disputes and Errors
	Given the nature of stock price quoting services, prices may vary among sources at any given time. If current prices are not available for any reason, transactions may be posted at the latest pricing date available. When you make a trade on the web page, you will receive a cofirmation. You must keep copies of your confirmations. If you believe an error has been made on your account, please call during our office hours. Don't call without the confirmation number of the trade in question. The management of Stock-Trak has the ultimate authority to settle disputes.

13.	Portfolio Statements
	Student account statements will be sent to the professor every one or two weeks according to the request of the professor. Account activity can also be reviewed at www.stocktrak.com. Professor summary reports, which show class rankings, will be distributed each week to the professor. It is important to keep copies of the statements received since they cannot be reprinted.

14.	Number of Transactions
	The number of transactions is determined by your professor. Most accounts are limited to 100 (although some professors allow students 200) transactions. Each buy counts as a transaction and each sell counts as another transaction. For example, if you buy a stock and sell it later, you will be charged with 2 transactions.

15.	Miscellaneous
	On the last day of the trading period, portfolio liquidation is not required; portfolios will be valued at closing prices for that day. Trading may be temporarily halted during severe weather conditions or other unforeseen events. Trading may be halted on a particular security if significant news comes out after the market has closed. These rules are subject to modifications without notice. You should understand that Stock-Trak's Portfolio Simulations are intended to be as representative of actual portfolio management as possible; however, some requirements and transactions have been simplified. With the use of your specified account number, you acknowledge reading, understanding, and accepting the terms of the Stock-Trak Portfolio Simulation as described herein. You also agree that Stock-Trak, its management, and its employees will not be held liable for damages of any kind that result from the use of the account.