Writing Portfolio Essay

market risk and purchasing power risk Business risk and financial risk Protection Can be eliminated through hedging, asset allocation and diversification Can be eliminated through portfolio diversification •

Harry W. Markowitz, the father of “Modern Portfolio theory”, developed the mean-variance analysis, which focuses on creating portfolios of assets that minimizes the variance of returns i.e. risk, given a level of desired return, or maximizes the returns given a level of risk tolerance. This theory aids the process of portfolio construction by providing a quantitative take on it. It integrates the field of quantitative analysis with portfolio management. Mean variance analysis has found wide applications

Alex Sharpe’s Portfolio 1. Returns and Risk Estimate and compare the returns and variability (i.e. annual standard deviation over the past five years) of Reynolds and Hasbro with that of the S&P 500 Index. Which stock appears to be riskiest? S&P 500 Annualized Expected Return: 6.8920% S&P 500 SD (Annualized): 12.477% Reynolds Annualized Expected Return: 22.4980% Reynolds SD (Annualized): 32.446% Hasbro Annualized Expected Return: 14.2060% Hasbro SD (Annualized): 28.114% Reynolds

User Ms Julie Ciarlante Course FIN-601-001 - FA 13-14 Test FIN 601 Final Exam Started 12/12/13 7:19 PM Submitted 12/12/13 9:25 PM Status Completed Attempt Score 126 out of 135 points   Time Elapsed 2 hours, 5 minutes out of 5 hours. Question 1 3 out of 3 points A bond with an annual coupon of $70 and originally sold at par for $1,000. The current market interest rate (yield to maturity) is 8%. This bond will sell at _______. Assuming no change in market interest rates

average, over time provide a higher return than investing in fixed-interest securities. a. True b. False 2. Investments through a stock exchange are limited to ordinary shares issued by listed corporations. a. True b. False 3. Portfolio theory contends that a diversified share portfolio enables an investor to significantly reduce the portfolio’s exposure to systematic risk. a. True b. False 4. A share that has a beta of one is twice as risky as an average share listed on a stock market. a. True b. False

with Priceline; Visa is more correlated with Priceline than it is with Disney. When it comes to portfolios, correlation describes the degree of relationship between the price fluctuations of those assets included in the portfolio. Securities with the perfect negative correlation would build a most diversified portfolio. By contrast, the worst diversified portfolio’s correlation is +1. Among three portfolios we have built up with each two companies, the most diversified one is Disney with Priceline while

Introduction This report is established to illustrate the performance of portfolio by using modern portfolio theory to make one portfolio allocation decisions per year (round) over nine years (rounds) in an investment game and find out a reasonable strategy to meet a particular investment objective. Specifically, it tries to figure out following questions: 1. How the investment decisions can be made？ 2. The research that is undertook 3. The critical factors that influenced the decision 4. How are

FINC 6009 Portfolio Theory & Its Application Group Assignment Dr Hamish Malloch Cross Streams Zhe Yan 430462009 Table of Contents Executive Summary Justification of Data Section One: Portfolio Constructions Section Two: Empirical Results and Discussion Section Three: Fama-French Model Section Four: Regression Analysis Section Five: Re-consideration of Smart Beta Strategy and Conclusion Executive Summary Recent years have seen the rapid development of

appropriate required rate of return of an asset in finance field, providing information to investor to make decisions about investment portfolios and guide investors’ investment behaviours (McLaney, 2006). The CAPM was invented by William F. Sharpe, John Lintner and Jan Mossin, basing on the earlier work of Harry Markowitz on diversification and modern portfolio theory, and now it is universally applied (Vernimmen, et

Economics of Corporate Finance Capital Asset Pricing Model is the foundation stone of modern finance theory. It reveals the basic operation rules of the capital market and it is important in market practice and theory research(). By use of this model, the relation between risk and expected return is accurately predicted, and provides a method to estimate the yield of potential investment projects and help us to predict the expected rate of return of market in future. Although the Capital Asset Pricing