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.
Nobody downloaded yet

Portfolio risk management - Essay Example

Comments (0) Cite this document
Summary
Name…………………………………………………………………………….xxxxxx Institution……………………………………………………………………….xxxxxx Course……………………………………………………………………………xxxxx Professor………………………………………………………………………….xxxxx @2012 Abstract A well-maintained portfolio is vital to every investor aiming at maximizing wealth…
Download full paperFile format: .doc, available for editing
Polish This Essay94.2% of users find it useful
Portfolio risk management
Read TextPreview

Extract of sample
"Portfolio risk management"

Download file to see previous pages tfolio analysis studies the performance of different portfolios under different circumstances (Reilly & Brown 2011).Portfolios can be grouped according to industries, countries or sector. Each group consists of sub-unit. For example, the financial sector can be made up of several banks or the Airline industry can be made up of several airline companies. The analysis of each portfolio helps an investor in making a decision when investing. Most likely, a rational investor will choose the best portfolio and screen out the ones that are not essential based on objective criteria. A good portfolio is characterized by high returns on investment (Reilly & Brown 2011). Portfolio analysis requires subjective judgment as it is not easy to segment different industries. Portfolio analysis is a process as different financial instruments have to be evaluated one by one. The process is time consuming and involves a lot of effort. In spite of these odds, Markowitz the fonder of modern portfolio analysis has simplified the process by suggesting use of expected return and variance (Brigham & Houston 2009). In this report, we will discuss four steps of constructing a portfolio. Q 1.a Construction of a portfolio The portfolio we are to construct consists of IBM and Shell Gas shares using weekly data from 2007 to 2012. A good portfolio is characterized by high returns and moderate risk. It is also well diversified just like in our case where we have IBM and Shell Gas shares. The first step in constructing a portfolio is an assessment of your expectations and attitude towards risk. Basically, there are two types of investors, the aggressive investor and the conservative investor. An aggressive investor is willing to take more risks by devoting larger portions to equity and less to bond and other fixed income securities. On the contrary, the conservative investor takes less risk as his main goal is to protect the value. On the other hand, an aggressive investor aims at maximizing returns by accepting more risk. A moderately good portfolio is one which satisfies the tolerance of average risks, attracts all those people who are willing to take in more risks in their portfolios in order to help them in the achievement of a balance of capital growth and income. Therefore, as an investor you should be in a position of knowing the category where you suit. The second step is choosing the portfolio. In our case, we consider the individual shares that have high returns and have the outperformed the FTSE 250 mid-cap index (FTMC). The portfolio will have 21 shares. Below is the portfolio f our choice: After choosing the portfolio, the next step is to identify, risk and return. In identifying risk and return, we use mean-variance analysis which was derived by Markowitz in 1952. Markowitz (2000) suggests that a portfolio with the lowest level of risk is to be ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Portfolio risk management Essay Example | Topics and Well Written Essays - 2500 words”, n.d.)
Portfolio risk management Essay Example | Topics and Well Written Essays - 2500 words. Retrieved from https://studentshare.org/management/1403072-portfolio-risk-management
(Portfolio Risk Management Essay Example | Topics and Well Written Essays - 2500 Words)
Portfolio Risk Management Essay Example | Topics and Well Written Essays - 2500 Words. https://studentshare.org/management/1403072-portfolio-risk-management.
“Portfolio Risk Management Essay Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.org/management/1403072-portfolio-risk-management.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Adaptive Portfolio Management using Evolutionary Algorithm
Adaptive Portfolio Management using Evolutionary Algorithm A Dissertation Proposal* Farhad Bahramy 31. July.2011 Table of Contents 1.Introduction: 3 2.Motivation: 4 3.Problem Definition: 4 4.Relevant Literature: 6 5.Proposed Approach: 8 I.Market Trends 8 II.Execution rules 9 III.Risk management rules 10 IV.Representation: 10 V.Evolutionary Process: 12 VI.Evaluation of the strategies: 15 VII.Execution of adapting the strategies: 16 VIII.Performance measurement: 17 6.Question to Be Answered 17 7.Expected Contribution 17 8.Work Plan: 18 9.References: 18 1.
9 Pages(2250 words)Essay
Risk financing and portfolio management
The objective of this report is to show how options (calls and puts) and option spreads can be used to hedge against the risk of an equity investment. The stock that has been chosen for analysis is Oracle which represents a publicly traded company on the London Stock Exchange.
10 Pages(2500 words)Essay
The Portfolio of Current Issues in Risk Management
For example, the Japan earthquake affected global electronics and caused disruptions in the automobile industry. The Thai floods also caused shortages in the hard disk drive market and caused losses to electronics companies. The global supply ties in businesses with each other, and what seems to benefit industries also implies significant risks in their activities.
9 Pages(2250 words)Essay
Risk and Portfolio Context
Finance is all about allocation of an individual’s assets in such a way that these assets generate return over them so that their value increases with time and inflation, and provides financial benefit to the investor.
6 Pages(1500 words)Essay
Risk Management and Investment (Portfolio E)
I opted to use the bottom up approach analysis which I felt would work best for this portfolio and came up with the following recommendations: To Reduce the cash weighting Remain invested in Equities. Reduce the number of sectors they have invested in and instead invest in more profitable ventures.
16 Pages(4000 words)Essay
Portfolio Management
The portfolio formation is characterized by the attainment of optimal returns and diversification of risk. The main strategy in the formation of portfolio is the preservation of capital. However, the strategy of preservation of capital does not mean that one should exit his position of asset holdings in the event of incurring losses.
4 Pages(1000 words)Essay
Risk Involved In Investment And Portfolio Management
According to the essay, risk happens to be the most crucial and inevitable factor involved in financial investment. Investors at all stages are vulnerable to various types of risks associated with different investments. Shares are riskier than bonds because they do not bear any legal guarantee for the investors to recover their principal amount.
4 Pages(1000 words)Essay
What were the causes and effects of the global financial crisis in 2007 and three clear leasons for portfolio risk management that have emerged from this experience
However, the downside of the system is the ripple effect of changes that is almost inevitable in the modern world. If the economy of one important country or region fluctuates, its tremors are bound to be felt by multiple regions. Similar conditions were
11 Pages(2750 words)Essay
Risk Management and Investment Coursework Portfolio
It is evident that the performance of the stocks is better, but performs dismally compared to other stocks. I checked the portfolio seeing if there are any rebalancing needs that need to be done. I looked at the
15 Pages(3750 words)Essay
Strategic risk management
As such, it is important to understand the determinants of risks if mitigation or preventative measures are to be adopted to solve them. Research has it that around 90 percent of risks is associated with human error and it is necessary to understand what determines
7 Pages(1750 words)Essay
Let us find you another Essay on topic Portfolio risk management for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us