asset allocation

overview
• everyone starts with same amount of cash,
same number of shares in a company
• each round: you can buy or sell shares
• end of each round:
• receive interest on current cash
• dividend announced; receive dividend payment
for each share you own
• final round: each share may have cash value
• total payoff = end of game cash
• interest rate; dividend and redemption value
per share: same for all players

asset allocation www.moblab.com 9A Playground for Decisions

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your screen
current round/total rounds

asset allocation www.moblab.com 9A Playground for Decisions

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your screen
current cash & per-round interest rate

asset allocation www.moblab.com 9A Playground for Decisions

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your screen
number of shares you currently own

asset allocation www.moblab.com 9A Playground for Decisions

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your screen
possible per-round per-share dividends

asset allocation www.moblab.com 9A Playground for Decisions

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your screen
end-of-game dollar value of each share

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the market for shares
terminology
• bid: offer to buy at a specified price
• ask: offer to sell at a specified price
you buy a share if
• you press “Buy at the Lowest Ask”; OR
• you have the highest bid and someone
agrees to sell at this price
you sell a share if
• you press “Sell at the Highest Bid”; OR
• you have the lowest ask and someone
agrees to buy at this price

asset allocation www.moblab.com 9A Playground for Decisions

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transacting shares
move slider to choose a price

asset allocation www.moblab.com 9A Playground for Decisions

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transacting shares
press BUY or SELL to place order

asset allocation www.moblab.com 9A Playground for Decisions

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transacting shares
current highest BIDS

asset allocation www.moblab.com 9A Playground for Decisions

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transacting shares
press to sell at $7.55

asset allocation www.moblab.com 9A Playground for Decisions

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transacting shares
current lowest ASKS

asset allocation www.moblab.com 9A Playground for Decisions

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transacting shares
press to buy at $11.82

asset allocation www.moblab.com 9A Playground for Decisions

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transacting shares
previous transactions in this round

asset allocation www.moblab.com 9A Playground for Decisions

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the market for shares
you buy a share if
• you press “Buy at the Lowest Ask”; OR
• you have the highest bid and someone
agrees to sell at this price
you sell a share if
• you press “Sell at the Highest Bid”; OR
• you have the lowest ask and someone
agrees to buy at this price
constraints: can only sell shares you
own or buy shares with money you have

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payoffs: an example
suppose
• redemption value=$2; interest rate=10%
• begin final round: $77.40 and 4 shares
• final round: sell 1 share@$2.60;
dividend=$0.40
payoffs calculated
Payoff = cash(1+int rate) + dividend*shares + redemption*shares
$95.2 = ($77.40+$2.60)(1.1) + $0.40(4-1) + $2.00(4-1)
0

asset allocation www.moblab.com 9A Playground for Decisions

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payoffs: an example
suppose
• redemption value=$2; interest rate=10%
• begin final round: $77.40 and 4 shares
• final round: sell 1 share@$2.60;
dividend=$0.40
payoffs calculated
Payoff = cash(1+int rate) + dividend*shares + redemption*shares
$95.2 = ($77.40+$2.60)(1.1) + $0.40(4-1) + $2.00(4-1)
0

asset allocation www.moblab.com 9A Playground for Decisions

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payoffs: an example
suppose
• redemption value=$2; interest rate=10%
• begin final round: $77.40 and 4 shares
• final round: sell 1 share@$2.60;
dividend=$0.40
payoffs calculated
Payoff = cash(1+int rate) + dividend*shares + redemption*shares
$95.2 = ($77.40+$2.60)(1.1) + $0.40(4-1) + $2.00(4-1)
0

happy playing!

asset allocation www.moblab.com 9A Playground for Decisions

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