StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

4 - Investment Portfolio Management - Assignment Example

Cite this document
Summary
Therefore, in order to calculate the expected return the formula that needs to be applied is as follows:
However, in this case we have to incorporate the…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.5% of users find it useful
Assignment 4 - Investment Portfolio Management
Read Text Preview

Extract of sample "4 - Investment Portfolio Management"

Download file to see previous pages

on while a value of 4 suggests greater risk aversion Therefore, in this case the utility adjusted return needs to be calculated which is actually the market risk premium expected by the investor. The formula for calculating the utility adjusted return is as follows: Putting the values in the formula, the utility adjusted return is obtained to be 5.52% which is greater than the risk free rate. This return is adjusted for the risk borne by the investor and therefore is the expected market risk premium required by the investor. ii) The allocation between stocks and risk free assists will have to be done on the basis of the risk aversion coefficient of the investor.

In this case, the investor has a risk aversion score of A = 4; which suggest that the investor is more risk averse and thus will always choose to invest the majority proportion of the funds in less risky assets. Putting the values given above in the aforementioned formula we obtained the expected return of the portfolio to be 13.81% (refer to excel sheet for calculation). The standard deviation was calculated using the standard deviation formula in excel which provided a value of 0.034 for the current portfolio of the investor. iii) The underlying reason behind the inclusion of fund C is the fact that it has the highest expected return with the same standard deviation.

This suggests that an investor investing in fund C will realize greater returns by assuming the same degree of risk borne by an investor who invests in fund A. In addition, the correlation of returns with the current portfolio for fund C is the highest. This suggests that fund C best compliments the investor’s current portfolio. Therefore inclusion of fund C within the current portfolio would be an optimal choice. iv.) In order to calculate the expected portfolio return and standard deviation value of the newly formed portfolio which includes the index fund C alongside the previous stocks, the same formula that was applied while

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Assignment 4 - Investment Portfolio Management”, n.d.)
Assignment 4 - Investment Portfolio Management. Retrieved from https://studentshare.org/finance-accounting/1676390-assignment-4-investment-portfolio-management
(Assignment 4 - Investment Portfolio Management)
Assignment 4 - Investment Portfolio Management. https://studentshare.org/finance-accounting/1676390-assignment-4-investment-portfolio-management.
“Assignment 4 - Investment Portfolio Management”, n.d. https://studentshare.org/finance-accounting/1676390-assignment-4-investment-portfolio-management.
  • Cited: 0 times

CHECK THESE SAMPLES OF Assignment 4 - Investment Portfolio Management

Portfolio Management: Financial and Managerial Accounting

The paper contains the calculations which form an important aspect of portfolio management and helps students gain the required knowledge and skills to analyze financial markets.... The investment is calculated must be compounded over multiple records.... The will help students get the proper base to further their financial skills and analysis concepts....
6 Pages (1500 words) Assignment

Funds Management and Potfolio Selection

Fund management is one type of financial intermediation which can help investors to manage their wealth in a manner that not only provides consistent returns but also preserves the capital of the investors.... Fund management is often considered as the professional management of the different securities as well as assets in order to meet the specific goals of the investors.... Fund management industry is typically dominated by small as well as large players which cater to the specific needs of the various groups of customers and offer specialized services by creating specific niche markets for themselves....
6 Pages (1500 words) Assignment

Analysis of investment and management of portfolio

By evaluating the strengths and weaknesses of an organization, one can assess the organization's internal management efficiencies.... Substantial asset portfolio is another notable strength of the organization.... In addition, an improved asset portfolio benefits the organization to easily raise funds in times of needs....
5 Pages (1250 words) Assignment

W5HIA-Ranking/evaluating the portfolio and making portfolio decisions

Both the companies employed an organized and systematic approach for implementation of project management practices and through establishment of project or portfolio management offices (PMO).... The Wiley Guide to Program & portfolio management.... hellip; compressed with tight schedules to complete budgets and seek quick returns on investments, organizations modify their management approaches to respond rapidly changing business environment....
2 Pages (500 words) Assignment

Ensuring Maximum Returns from Investments Assets

Also, in considering investing in the stock market an investor should carry out thorough study of the companies in which he intends to purchase the stocks by paying much attention to its financials, the management and also its future plans.... In addition, the project is key in helping the group members… erience a practical view of what really happens in the portfolio investment, including portfolio selection, asset allocation, and risk-return decisions. In order to ensure maximum returns from investments assets, investors not only consider the financial asset that has ty of giving maximum returns, but also include in the investment basket of less risky investment assets, with intent of minimizing the investment loss should one asset suffer poor performance (Daniel et al....
4 Pages (1000 words) Assignment

Investment Portfolio Based Exclusively on Stocks

The objective of this paper is to build an investment portfolio based exclusively on stocks.... The best way to achieve a solid investment strategy is by building a diversified portfolio of various investments s which along with stocks includes other investments such as bonds, real estate and another type of business.... An investor that builds a diversified stock portfolio is able to minimize market risk....
10 Pages (2500 words) Assignment

Portfolio Management: Finance

In addition, despite the skepticism of many investment thinkers, prices and volume patterns may also be used for the purpose of performing technical analysis.... The following three stocks were chosen for additional investments in this paper: British American Tobacco, easyJet (airline), and Experian (software technology or industrial)....
11 Pages (2750 words) Assignment

A Portfolio Management Methodology

… Prince 2 Project management MethodologyPrince 2 is just a simplification of Prince that is an improved version of PINCE.... Definitively, it implies that a project is under control in Prince 2 Project management MethodologyPrince 2 is just a simplification of Prince that is an improved version of PINCE.... According to Tuttle (2012), there are 8 processes, 7 components and 3 techniques applied in project management.... Below is a detailed discussion of these elements and how the relate to project management....
11 Pages (2750 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us