8. Which one of the following best describes a portfolio? A. Risky security
B. Security equally as risky as the overall market
C. New issue of stock
D. Group of assets held by an investor
E. Investment in a risk-free security
15. Which one of the following is the slope of the security market line? A. Risk-free rate
B. Market risk premium
C. Beta coefficient
D. Risk premium on an individual asset
E. Market rate of return
21. Standard deviation measures _____ risk while beta measures _____ risk. A. systematic; unsystematic
B. unsystematic; systematic
C. total; unsystematic
D. total; systematic
E. asset-specific; market
23. The risk premium for an individual security is based on which one of the following types of risk? A. Total
B. Surprise
C. Diversifiable
D. Systematic
E. Unsystematic
27. Candy and More stock is expected to produce the following returns given the various states of the economy. What is the expected return on this stock?
A. 7.89 percent
B. 8.56 percent
C. 9.43 percent
D. 9.90 percent
E. 10.02 percent
Expected return = (0.05 0.02) + (0.70 0.09) + (0.25 0.14) = 9.90 percent 32. You own a portfolio that is invested as follows: $11,600 of stock A, $7,800 of stock B, $14,900 of stock C, and $3,200 of stock D. What is the portfolio weight of stock C? A. 38.47 percent

B. 39.73 percent
C. 41.26 percent
D. 41.94 percent
E. 43.08 percent
WeightC = $14,900/($11,600 + $7,800 + $14,900 + $3,200) = 39.73 percent 34. You have compiled the following information on your investments. What rate of return should you expect to earn on this portfolio?

...PortfolioInvestment
1
Abstract The objective of this work is to optimize portfolios and to evaluate their performances. CAPM and APT models are important models that use statistical measures in order to achieve the objective. Throughout this work we improved our knowledge regarding portfolio theory and its application. Literature and Data For information we used the book Investments and Portfolio Management by Bodie, Kane and Marcus as well as material given during the lectures. We used Microsoft Excel to elaborate data and the sources were given during the labs.
Assignment 1
Introduction: The goal is to explore and compare different methods such as CAPM, APT and portfolio theory. Methodology: In this assignment we exploit theories such as the Portfolio Theory, Mean-Variance Theory and the CAPM. So, we are assuming all the hypotheses that these theories assume. Among all, we are assuming that average return is a good measure of return and the risk could be calculated with the standard deviation. When we use CAPM, we are implying that the only risk is the Beta with the market (systematic risk) because we can reduce the risk of each asset to zero, with a well-diversified portfolio. In APT, we assume there are other important risks related to other factors. So, the main difference between APT and CAPM is that while CAPM only considers the...

...chose to diversify my portfolios by combining stocks, bonds and cash savings in difference proportions.
I choose home market (UK market) to invest with the goal of maintaining a balance of income and capital growth. Investment in the UK is not bring high profit and fast but its safe and stable because less risk. Investing aboard will bring high return but the risk high also. Invest international market we may consider some types of basic risk. Initially, it is the change in trade policies, taxation and the regulation of government. Besides, the accounting standards vary from country to country. Differences in accounting practices can be affect to appearance of profitability and influence to the investor’s decision. Moreover, international investing involves securities denominated in foreign currencies (currency exchange risk), therefore, invest in UK market maybe the good choice.
My risk tolerance level of 22 is moderate to aggressive (coefficient of risk aversion A=2.5) (Bodie, Kane, Marcus, 2001) and I am looking for safety of principal and growth of capital and accept moderate amount of risk. The expected high returns for this portfolio at least 6% or more.
I have decided to allocate my assets among stocks; bonds and cash following charts bellows:
After divide asset allocation, then I am going to conduct investment. It is depend on many factors such as market price, beta, dividend yield, standard...

...opportunities from which to construct a portfolio:
a. Risk-free asset earning 12% per year.
b. Risky asset with expected return 30% per year and standard deviation of 40%.
If you construct a portfolio with a standard deviation of 30%, what is its expected rate of return?
Ans:
P = 30 = yy y = 0.75
E(rP) = 12 + 0.75(30 12) = 25.5%
2. Suppose that there are many stocks in the security market and that the characteristics of Stocks A andB are given as follows:
Stock Expected Return Standard Deviation
A 10% 5%
B 15 10
Correlation = -1
Suppose that it is possible to borrow at the risk-free rate . What must be the value of the risk-free rate? (Hint: Think about constructing a risk-free portfolio from Stocks A and B.)
Ans:
Since Stock A and Stock B are perfectly negatively correlated, a risk-free portfolio can be created and the rate of return for this portfolio, in equilibrium, will be the risk-free rate. To find the proportions of this portfolio [with the proportion wA invested in Stock A and wB = (1 – wA ) invested in Stock B], set the standard deviation equal to zero. With perfect negative correlation, the portfolio standard deviation is:
P = Absolute value [wAA wBB]
0 = 5wA [10 (1 – wA )] wA = 0.6667
The expected rate of...

...BOURNEMOUTH UNIVERSITY
International Investment Management
Mid-term Assignment
Submitted by: Anindyta Ayu Indhriawati
25/03/2014
Submitted to: Dr Charalampos Stasinakis
The purpose of this paper is to examine the relevance from the modern portfolio theory to the global investment market. Some of the questions that related to the use of techniques about the portfolio theory and it’s relation to risk and return will be discussed in terms of solving the complexity of the portfolio problems faced by investor and how to make a decision based on the investment analysis.
By choosing 5 random company’s stocks for one month period under the FTSE100 that taken from yahoo finance, hence expected to answer about the uncertainty regarding investment in portfolio. The companies are Melrose Industry Plc, BP Plc, Vodafone Group Plc, GlaxoSmithKline Plc (GSK), and Kazakhmys Plc. The used data was the daily closing price data for January 2014.
Table 1 Daily stock price from 5 companies under FTSE 100
Source: Yahoo Finance (2014)
From the data taken it shown the historical stock price for each company. Furthermore, daily stock price data will be used for counting daily return to have the final average return. Daily return can be obtained by calculation with the following:
Daily return for the...

...DECLARATION
I here by declare that the project entitled
“PORTFOLIO MANAGEMENT AND INVESTMENT DECISION”
Submitted for partial fulfillment for the award of
Degree of
MASTER OF BUSSINESS ADMINISTRATION is entirely original and
Has not
Been
Submitted earlier by any one for any Degree or Diploma.
DATE:
PLACE:
Objectives and methodology
Aim of the study:
The study focuses its attention on the functioning of stock markets and
Construction of the equity portfolio
Objectives:
➢ To study the investment decision process.
➢ To analysis the risk return characteristics of sample scripts.
➢ Ascertain portfolio weights.
➢ To construct an effective portfolio which offers the maximum return for minimum risk
Methodology
➢ Visiting Kotak securities at Banjara hills, Secunderabad and collecting information
➢ Discussions were conducted with the personnel of Kotak securities
Sources of information
The study uses extensively both primary and secondary data
Primary data:
Information was collected through this source comprises of discussions with the personnel of Fortis securities
Secondary data:
The...

...transmittal
Dear Mr. Saif Rahman
Here is the term paper on investment analysis & portfolio management from 31st may to 1st august.
Now you will see that we have collected stock information and calculate relative things to evaluate our performance. We think that if anybody want to invest in the DSE , this term paper can help them to make decision whether or not they will invest or not and what strategy should they follow. Finally, we are also very much satisfied to have the scope of doing this investment which gave us the practical flavor like working in a real workplace.
We really hope that you will enjoy reading our term paper as much as we had enjoyed doing it. Thank you very much, for giving us such an opportunity to complete such an interesting term paper.
Sincerely yours
Mohammad Saifujjaman 073 442 030 _____________________
M. Ashikur Rahman 081 076 530 _____________________
Wael Ahmed 081 256 030 _____________________
M. Shafayet Hassan 081 305 030 _____________________
Acknowledgement
We would like to thank all the authors of the journals, books and articles that are secondary sources from where we have collected necessary information regarding our term paper. Also we would like to thank the fellow classmates who helped us when we faced any problem.
Our report was the endeavor of a great experience on both the practical and the theoretical field of portfolio...

...INTEREST-BEARING SECURITIES AND THEIR ROLE IN PORTFOLIO MANAGEMENT
Introduction
Investment management is the professional asset management of various securities (shares, bonds and other securities) and other assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations, charities, educational establishments etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded funds)
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)
Bonds, notes, mortgages, debentures, certificates of indebtedness, equipment trust certificates, and other evidences of debt, that yield interest, as contrasted with equity securities, such as preferred stocks, common stocks, and other evidences of ownership, that yield dividends and other distributions. Interest and dividends differ in their strength of claim, interest being a fixed charge which if not paid entitles the creditors to legal recourse in event of default; whereas dividends are not fixed charges, being dependent upon availability of funds therefor as well as decision by the management of the entity whether or not to pay dividends.
An interest-bearing instrument is a claim against...

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