Stock and Bond Market Simulation Game Dec97-16 Senior Design Project

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Title of Project
Date (of draft; of formal design review, of presentation to client)
Problem Statement and/or Design Objectives
Proposed Technical Solution
Budget (all important resources; expenditures to date; forecast to project completion)
Schedule (update original Gantt chart; discuss deviations from project schedule)
Review of Prior Art
Client, Faculty Advisor, Team Members (with address, phone, e-mail, etc.)
Other comments as appropriate

Problem Statement and/or Design Objectives
   This team is to create a simulation of a stock and bond market to be used as a teaching tool for students of finance. The simulation should be based on an accurate model of the markets. Included in this model is the ability of players to sell short, buy on margin, and borrow from a bank. The change in stock values will incorporate the current market trend, a random factor, and the activity of that stock. The simulation should be playable by multiple players and should incorporate artificial opponents if necessary.

Proposed Technical Solution
    The team has taken a software engineering approach to the problem. We first broke the model down to its components and achieved a thorough knowledge what our simulation is to do. We outlined the sequential flow of the simulation and turned this into a useable physical model. We tested this model to ensure that the sequence previously outlined would work in a game type environment.

Once we had proven the feasibility of our model, we set about the ask of preparing to code. The model was examined and any variables which would be needed were defined. At this point, the code was divided into modules which could be worked upon separately by one or two members of the group. The original plan had called for developing the code in a Matlab environment. Matlab was chosen for its matrix and graphical user interface (GUI) abilities. This solution has since been discarded in favor of using Visual Basic (VB). VB also has excellent GUI capabilities, but it also has the ability to create an executable file. If we were to use Matlab, the final product would be limited to only being used in that environment.

The next steps in the solution involve testing and documenting the product. The product will be tested through two methods. The designers will attempt to thoroughly test the product through as many different combinations of inputs as we can create in a reasonable amount of time. After this, the item will be turned over to a group of possible users. The users, who are unaware of the inner workings of the software, will be allowed to use the product and they will give feedback to the designers. This feedback will serve several functions. It will help find any bugs, show us possible improvements, and aid in the documentation. As the users have difficult figuring out the intricacies, we will have a better idea on what to include in the instructional documentation.

Once the software has been thoroughly tested and documented, the product will be delivered to the client. As the project is ending, the possibility of supplying continued support for the software is difficult. This problem has not yet been solved beyond providing a well designed, tested, and documented piece of software.

Budget (all important resources; expenditures to date; forecast to project completion)
Monetary: This project should not require any purchases. The facilities provided by the university should take care of our needs.

Time: With four team members, we estimated an average of four hours per week for each person. This translates to approximately 200 man hours for the 2 semesters. The time required to complete various tasks have been estimated as follows (all figures are in hours):

This total allows some room in case of emergencies and unplanned difficulties.  Exact number of hours spent to date has not been kept track of.  Planning and research tasks have been completed as scheduled without large time strains on the designers.

Schedule (update original Gantt chart; discuss deviations from project schedule)

Review of Prior Art
So far, the old PC game, "Stock Market: The Game" is the only game we have that is similar to what we want to do. We tried to find a board game that is similar to our design target. Yet, we have not been able to get it.

Stock Market: the Game

We were trying to find some similar games that had been written before. Professor Sheble gave us an old PC game, which was written in 1990, Starsoft Development Laboratories’ "Stock Market: the Game". The interface of the game provided us with some ideas about an interface. However, there are still a lot of aspects of the game interface that can be improved. Since we are possibly using Matlab, we can simply create push buttons on the screen, creating a more user-friendly interface.

Besides this, we also found some other online games. These games, listed below, are different from our simulation in that they base changes on actual market changes. We have not seen enough detail into the games to give any more specifics.

1.SMG 2000: The stock market game

URL: http://www.smg2000.org/

The Stock Market Game (SMG2000) is an electronic simulation of Wall Street trading designed to help students and adults understand the stock market, the costs and benefits involved in decision-making, the sources and uses of capital and other related economic concepts.

SMG2000 is a new version of The Stock Market Game. Students enter their transactions using the Internet and can access their portfolios the following business day. SMG2000 is also available for adults to participate in some states.

2. Fantasy Stock Market

URL: http://fantasy.co.nz/

This game will more than likely be played by investors, brokers, university students in commerce degrees and anyone wanting to learn. The game familiarizes players with the New Zealand Stock Exchange, allowing for players to take risks for personal gains.

A new game will begin on the 1st of each month and last for 6 months. At the end of each game, all stocks will be converted to cash and the person with the greatest amount of money wins the prize!

3. STOCK-TRAK

URL: http://www.stocktrak.com/

STOCK-TRAK is a unique investment education tool where you can simulate managing an investment portfolio of stocks, options, futures, bonds, and mutual funds. (In plain English, they'll give you $100,000 in fake money in a brokerage account, and you can call a 1-800 number and pretend to buy and sell stocks and other securities.) STOCK-TRAK is a great way to test an investment strategy, learn about the financial markets, or, if you are a stockbroker, develop a track record with an independent 3rd party. STOCK-TRAK is currently used by nearly 10,000 college students each semester in their finance and investment courses.

Client, Faculty Advisor, Team Members (with address, phone, e-mail, etc.)

                                                Team Members

Other comments as appropriate
Outline of Rules

I. Setup
    A. Initialize stocks
    B. Initialize players (starting money and stocks)
II. Play (repeat for 12 rounds)
    A. Commit
        1. Rotate starting
        2. Each player states buy, sell, or no activity for each stock
    B. Buy/Sell (B/S)
        1. Rotate starting. Each player completes B/S before next starts
        2. Player states for each stock:
            a. Method of transaction: buy, buy on margin, buy a warrant, sell, or sell short
            b. How many
    C. Auction
        1. If more stocks are purchased than are available, an auction must be performed
        2. Each player who expressed interest in the stock must submit a closed bid.
        3. Highest bidder gets the number he wanted if available
        4. Next the 2nd highest gets his and on down until stocks are gone
    D. Complete transactions
        1. Sell
            a. Owner of stock gets current price
            b. # of stock available is updated
            c. If bought on margin, bank takes its share first
        2. Buy
            a. Player pays current price or auction price
            b. # of stock is updated
        3. Sell short
            a. Money at current market price is put away
        4. Margin
            a. Player is asked for amount of loan
            b. Stock is purchased with loan and players money
        5. Warrant
            a. Stock is purchased by bank and set aside
    E. Payments (If at any time a player cannot make a payment, go to F, emergency auction)
        1. Sell short
            a. 1 or 2 periods after purchase: require payment if stock rises by 10%
            b. 3rd period: player collects (or pays if negative) profit
            profit=current value-money in bank-fee (3% of original)
        2. Margin
            a. pay interest on loan
            b. margin call: if loan exceeds 75% of current value, player must bring up to current margin
        3. Warrant: player purchases stock at agreed price after 3 rounds (or before)
    F. Emergency auction
        1. Player chooses item to auction and # of shares
        2. Auction is conducted with closed bids
        3. repeat until payment is made or player is out of stocks and money
    G. Update
        1. Market trend is determined
        2. For each stock: determine random economic indicator and industry effect
        3. Stocks are updated using the previous 2 factors and its activity
III. End
    A. All debts are paid up
    B. Stocks are cashed in for current value
    C. Player with greatest net worth wins

© Copyright Iowa State University 1997

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