Investment and Portfolio Analysis
With the increasing economic downturn in the economy, the need of investment has increased considerable. The potential investors generally foregoes their current leisure and earnings and investment their earnings and expect to earn benefits in future for the same.

For analyzing the investment, we have taken into consideration a hypothetical investor who has $50,000 which needs to be invested in different, in different assets.

Investment is one of the most important aspect that is needed which helps in fulfilling different future needs of the investor. There are different assets in which an investor can invest so as to have a future benefits from the required investment. Every investment entails an amount of some risk which is associated. Investment helps in promising the return of the original amount along with an adequate return. So, investment is very important as it helps in fulfilling different future needs of the investor.

Investment is…...

Investment Portfolio
For this client, the total investment is $100,000. This is not the sum total of the investor's assets, but it will be invested in a diversified portfolio. It is assumed that the time horizon is medium-to-long-term. The investment portfolio will be built using the top-down approach, whereby asset classes are first determined and then the individual securities within those classes are determined subsequent. The first step in this process is to determine the appropriate weights of the four asset classes -- cash, fixed income, U.S. equities and international securities -- as well as the objectives of the investor. The investor is generally risk neutral and does not anticipating needing this money for anything in particular.

Global Economic Situation

The first step is to determine the current U.S. economic situation. We will start with the stock markets. The current levels of the Dow Jones Industrial Average and NASDAQ are high. The Dow…...

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References

BEA.gov. (2014). National income and product accounts. Bureau of Economic Analysis. Retrieved March 6, 2014 from  http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm 

Investopedia. (2014). Mutual funds: Different types of funds. Investopedia. Retrieved March 6, 2014 from  http://www.investopedia.com/university/mutualfunds/mutualfunds1.asp 

MSN Moneycentral. (2014). Retrieved March 6, 2014 from  http://money.msn.com/ 

Spicer, J., Lopez, L. & Jones, M. (2014). Fed officials see high hurdle for changing course on QE taper. Reuters. Retrieved March 6, 2014 from  http://www.reuters.com/article/2014/03/06/us-usa-fed-idUSBREA252A720140306

A common thread through these fifteen stocks is that they not only represent diversification as a group, but most of the companies chosen also have a range diversification within the company's operations. The companies are spread around the world, and include a number of sectors. For example, within technology the portfolio has access to the health care sector through Cerner; within ADRs there is exposure to the Internet, chemicals and pharmaceuticals. This level of diversification will only help the portfolio to achieve its objectives in the long run. Each of these stocks will have between 5-7% of the portfolio, totaling 90%. The remaining 10% will be held in a U.S. government Treasuries. The use of treasuries is to allow for some degree of safety in the portfolio, as Treasuries do little more than cover expected inflation. The current rate on 10-year federal government paper is 3.40% (Yahoo! Finance, 2011). The…...

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Works Cited:

McClure, B. (2011). Modern portfolio theory: Why it's still hip. Investopedia. Retrieved March 25, 2011 from  http://www.investopedia.com/articles/06/MPT.asp 

Burtless, G. (1999) Returns and Risks of Stock Market Investments. Brookings Institute Retrieved March 25, 2011 from  http://www.brookings.edu/testimony/1999/0511saving_burtless.aspx 

Yahoo! Finance. (2011). U.S. Treasury bond rates. Yahoo! Finance. Retrieved March 25, 2011 from  http://finance.yahoo.com/bonds 

Yahoo! Finance: Sterlite Industries. Retrieved March 25, 2011 from  http://finance.yahoo.com/q?s=slt&ql=1

However, it will depend upon the impact that rising prices will have on consumer spending and corporate balance sheets.
Geopolitical tensions could have an impact upon the price of commodities most notably: oil and gold. As various uncertainties around the globe, could have an impact upon the availability of oil supplies, which will cause prices to increase. A good example of this can be seen with the different protests that are occurring in: the various Middle Eastern and North African countries. As the numerous acts of civil disobedience have caused a number of countries that are large exporters of crude oil (such as: Libya) to suspend production. The reason why, is because they are: having to wrestle with their own internal security situation. As a result, oil prices rose to above $100 per barrel, on concerns about available supplies. This would have an impact on gold prices, because many investors…...

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Bibliography

Amazon.com. Yahoo Finance, 2011. Web. 17 Mar. 2011

Baidu.com. Yahoo Finance, 2011. Web. 17 Mar. 2011

Caterpillar. Yahoo Finance, 2011. Web. 17 Mar. 2011

General Motors. Yahoo Finance, 2011. Web. 17 Mar. 2011.

Investment Portfolio
The beta coefficient for Google, Inc. is 1.03 using the Excel Slope function (Christensen). Using the S&P 500 as a benchmark, this beta coefficient has a higher risk than the market (Christensen, How to Interpret a eta Coefficient). With this stock included in a portfolio, it would need to be diversified with less riskier investments in order to balance the overall portfolio risk and return on investment aspects of the portfolio. ecause the Google stock is at a higher risk, it could bring higher returns.

Using a CAPM calculator (Chimp), the cost of capital for Google, Inc. is 6.76%. The CAPM is a capital asset pricing model used to determine the cost of equity. The cost of equity is the return that stockholders require for a company and represents the compensation the market demands in the exchange for owning the asset and bearing the risks of ownership (Investopedia). The cost…...

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Bibliography

Chimp, Money. CAPM Calculator. n.d. Article. 06 July 2012.

Christensen, D. How to Interpret a Beta Coefficient. n.d. Article. 05 July 2012.

-- . How to Use Excel to Calculate the Beta Coefficient. n.d. Article. 05 July 2012.

Investopedia. Cost of Equity. n.d. online dictionary. 06 July 2012.

Where, this strategy will help them to mirror the underlying amounts of volatility. Once this occurs, is when the risks have been reduced dramatically. As result, such a strategy can be used by international investors, to reduce their overall amounts of risk, while increasing their profits.
ibliography

Artio International Equity. (2010). Retrieved June 19, 2010 from Yahoo Finance website: http://finance.yahoo.com/q/hl?s=JETAX+Holdings

Artio International Equity. (2010). Retrieved June 19, 2010 from Yahoo Finance website: http://finance.yahoo.com/q/rk?s=JETAX+Risk

Dodge and Cox International Stock Fund. (2010). Retrieved June 19, 2010 from Yahoo Finance website: http://finance.yahoo.com/q/hl?s=DODFX+Holdings

Dodge and Cox International Stock Fund. (2010). Retrieved June 19, 2010 from Yahoo Finance website: http://finance.yahoo.com/q/rk?s=DODFX+Risk

International Diversification. (2010). Retrieved June 19, 2010 from Financial Dictionary website: http://financial-dictionary.thefreedictionary.com/International+Diversification

T. Rowe Price International Equity Index. (2010). Retrieved June 19, 2010 from Yahoo Finance website: http://finance.yahoo.com/q/hl?s=PIEQX+Holdings

T. Rowe Price International Equity Index. (2010). Retrieved June 19, 2010 from Yahoo Finance website: http://finance.yahoo.com/q/rk?s=PIEQX+Risk

lanchet, C. (2010). enefits of Diversification. Retrieved June 19,…...

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Bibliography

Artio International Equity. (2010). Retrieved June 19, 2010 from Yahoo Finance website:  http://finance.yahoo.com/q/hl?s=JETAX+Holdings 

Artio International Equity. (2010). Retrieved June 19, 2010 from Yahoo Finance website:  http://finance.yahoo.com/q/rk?s=JETAX+Risk 

Dodge and Cox International Stock Fund. (2010). Retrieved June 19, 2010 from Yahoo Finance website:  http://finance.yahoo.com/q/hl?s=DODFX+Holdings 

Dodge and Cox International Stock Fund. (2010). Retrieved June 19, 2010 from Yahoo Finance website:  http://finance.yahoo.com/q/rk?s=DODFX+Risk

Likewise, a young investor may hold mainly equities.
Investor risk tolerance is another impediment to achieving asset class diversification. Investors will low risk tolerance, for example, are unlikely to hold high equity positions and even less likely to utilize more obscure securities like hedge funds. Yet, portfolios without equities may be highly susceptible to changes in the prevailing interest rates and therefore lack diversification. Indeed, for many investors a fully-diversified portfolio across asset classes is not desirable for their investment objectives, time frame and risk tolerance.

Lastly, asset class diversification can be hampered by knowledge of asset classes. Even without considering emerging asset classes, many classes require specialized knowledge - commodities, forex, real estate to name a new -- that may dissuade investors from utilizing them. Even relatively common asset classes such as preferred shares, zero coupon bonds or mutual funds can be sufficiently confusing. The degree of willingness of an…...

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Works Cited:

Polakow, D. & Gebbie, T. (2008). How many independent bets are there? Journal of Asset Management. Vol. 9, 4, 278-288.

Rowland, P. (1996). Transaction costs and international portfolio diversification. Journal of International Economics. Vol. 49, 1, 145-170.

Stocks have considerable more risk. Equity is subordinated to debt, which means that if the company goes bankrupt the bondholders get paid out first, before shareholders get anything. There is always the risk, therefore, that a shareholder could receive nothing for their shares, and lose all of their money. Even a bondholder might receive something -- pennies on the dollar -- in the event of bankruptcy, but a stockholder receives nothing at all This risk is only mitigated through diversification (Damodaran, n.d). There is also the risk for any given stock that it drops below the purchase price and never recovers, so that the investor will need to take a loss in order to sell. This is also the case with mutual funds. While less risky because of their diversified nature, they still function like equities and there is no guarantee either of distributions or of capital gains to mutual…...

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References:

Bodie, Z., Kane, a., & Marcus, a. (2010). Essentials of investments: 2011 custom edition (8th ed.). Boston, MA: McGraw-Hill.

Damodaran, a. (no date). Risk and return models: Equity and debt. Stern School of Business. Retrieved April 23, 2013 from http://people.stern.nyu.edu/adamodar/pdfiles/acf2E/presentations/risk&ret.pdf

Investopedia. (2013). Risk averse. Investopedia. Retrieved April 23, 2013 from  http://www.investopedia.com/terms/r/riskaverse.asp

After that point, Ford's stock has risen significantly and to the point where the company is substantially outperforming the S&P 500 over the past three years. Ford's beta is 2.52, which confirms this trend towards high volatility. The comparable companies, Toyota and Honda, are significantly less volatile. One year ago, each were outperforming Ford but today Ford's performance has surpassed both. Ford has a better net margin than its industry peers, but a weaker gross margin. Ford turned a profit last year, so its returns are higher than most of its industry peers, who tended to lose money. Ford has a strong current ratio of 1.82, significantly higher than the industry average.
Citigroup has underperformed both the market and its competitors. Over the past three years, Citigroup stock has lost over 90% of its value. The S&P 500 has lost around 20% of its value in the same time. Among…...

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Works Cited:

Data and charts from MSN Moneycentral. Retrieved April 11, 2010 from  http://moneycentral.msn.com

Corporate Finance
Andrea Corbridge is an investor who is considering investing in the stock portfolios of the Adelphia Technologies and Kalama Corp. The paper uses the Excel software to calculate the possible investment combination of the two portfolios. Based on the expected returns and the standard deviations of the two equities, the paper calculates the optimal investment combinations from 0% to 100% and the findings reveal there will be 18.65% expected returns from the investments. Based on the information on the two portfolios, it is advisable for Andrea to investment 39% ($19,736.84) of his $50,000 in the Kalama Corp equity and 61% ($30,263.16) in the Adelphia Technologies equity to earn 19% expected returns. Major reason is that the returns of the equity of Adelphia Technologies are higher than the returns of the Kalama Corp equity. By using the 39% and 61% investment combination, Andrea is likely to earn 19% expected returns…...

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Reference

Graham, J. Smart, S.B. & Megisson, W.L. (2010). Corporate Finance: Linking Theory to What Companies Do, 3rd Edition. Cengage Brain.

Fox, J. (2009). Myth of the Rational Market. Harper Business.

Kieso, D.E., Weygandt, J.J. & Warfield, T.D. (2007). Intermediate Accounting (12th ed.). New York: John Wiley & Sons.

Finance
The portfolio I constructed consists of Google and Apple. The rationale for this seemingly simple portfolio is actually quite complex. The portfolio maximizes my long-run wealth, and this paper will explain how this will work. The bottom line for me is that no other portfolio was going to deliver the same benefits as a 50/50 portfolio of these two technology giants.

Description of the Portfolio

Portfolio theory holds that a diversified portfolio will perform in line with the market on a risk-adjusted basis. This means that when a portfolio is fully diversified it will have a beta of pretty close to 1.0. But the thing about understanding this portfolio theory is that you have to take into account a wide range of factors in constructing the optimal portfolio. This paper will in part walk through this process of constructing this very dynamic portfolio that will deliver me superior returns.

It has been noted…...

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References

Anderson, K. (2014). Why Googl is up following Google stock split. Money Morning. Retrieved May 27, 2014 from  http://moneymorning.com/2014/04/03/why-googl-is-up-following-google-stock-split/ 

Beggs, J. (2014). The efficient market hypothesis. About.com. Retrieved May 26, 2014 from  http://economics.about.com/od/Financial-Markets-Category/a/The-Efficient-Markets-Hypothesis.htm 

Dilger, D. (2014). Why Apple decided to split its stock 7-to-1. Apple Insider. Retrieved May 27, 2014 from  http://appleinsider.com/articles/14/04/29/why-apple-inc-decided-to-split-its-stock-7-1 -

Investopedia. (2014). Modern portfolio theory. Investopedia. Retrieved May 26, 2014 from www.investopedia.com/terms/m/modernportfoliotheory.asp

Table of ContentsContentsTable of Contents 1Executive Summary 11. Introduction 12. Asset classes 12.1. Australian Shares (AUD) S&P/ASX 200 12.2. Australian Bonds (AUD) 22.3. US Shares S&P500 22.4. US Federal Funds Rate 22.5. Brent Oil (USD) 24. Efficient portfolios 35. Modern portfolio theory 46. Conclusion and Recommendation 5References 5Appendix 6Appendix 1: Arithmetic & Geometric Mean, Standard Deviation & Variance 6Appendix 2 Correlation Matrix 6Appendix 3: Covariance Matrix 6Appendix 4: Bordered Covariance Matrix 7Appendix 5: Efficient Portfolio 7Executive SummaryMultiple methods of establishing stock market volatility and performance exist with the majority of the methods founded on the Markowitzs Modern Portfolio Theory (MPT). In this analysis, and application of the MPT concept on five stocks is undertaken to establish an efficient investment portfolio. The analysis identifies the Brent Oil and the Australian S&P/ASX 200 shares as high risky assets, despite having the highest returns implying that the optimal portfolio would consist of the…...

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References

Bodie, Z., Kane, A., & Marcus, A. (2018). Investment, 11th Edn. McGraw-Hill Education, Newyork.

McKay, S., Shapiro, R., & Thomas, R. (2018). What free lunch? The costs of over-diversification. Financial Analysts Journal, 74(1), 44–58.  https://doi.org/10.2469/faj.v74.n1.2 

Page, S., & Panariello, R. A. (2018). When Diversification Fails. Financial Analysts Journal, 74(3), 19–32.

Santacruz, L. (2016). Asset allocation theory and practice in Australian investment management. Journal of Wealth Management, 9(2), 47–67.  https://doi.org/10.3905/jwm.2016.19.2.047

1. Explain the importance of net asset value (NAV) for mutual fund investing Net asset value (NAV) is delineated as the value of assets of a mutual fund scheme less the value of liabilities for every unit. It is the price in which an investor can purchase the unit of a scheme and also at the same time can be price at which the investor can sell the unit, less any load fees that might be applicable. The net asset value is significant for mutual fund investing as it mirrors the composite prices of all the securities held within the portfolio together with the liquid cash. Imperatively, if the prices of a great deal of the securities within the scheme increase, then the net asset value will also increase and the other way round. In addition, the net asset value moves concurrently with the prices of securities that are held within…...

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References

Danske Invest. (2017). Japanese Equity Fund. Retrieved from:

Investopedia. (2015). What are the advantages of foreign portfolio investment? Retrieved from: https://www.investopedia.com/ask/answers/061515/what-are-advantages-foreign-portfolio-investment.asp

Krueger, P. (2017). Active vs. Passive Investing. Investopedia. Retrieved from: https://www.investopedia.com/news/active-vs-passive-investing/

Nickolas, S. (2015). IWM: iShares Russell 2000 Index ETF. Investopedia. Retrieved from: https://www.investopedia.com/articles/investing/123115/iwm-ishares-russell-2000-index-etf.asp

Rastogi, A. (2016). Does Net Asset Value (NAV) really matter? The Economic Times. Retrieved from: https://www.google.com/amp/s/m.economictimes.com/mf/learn/fund-basics/does-net-asset-value-nav-really-matter/amp_articleshow/55435264.cms

https://www.danskeinvest.fi/web/show_fund.produkt?p_nId=1527&p_nFundgroup=61&p_nFund=2452

Introduction Investment in company shares necessitates significant analysis and examination of different financial aspects to ascertain its prospective growth or deterioration in the financial market. Financial performance is key in determining the share price and value. Financial performance is delineated as a measure of a firm’s revenues, returns, in addition to increases in value as demonstrated by the increase in the firm’s share price. It is a particular measure of how well an organization can employ and utilize assets from its key means of business and generate revenues. In addition, it is employed as an overall measure of an organization’s general financial health over a certain period of time and can be used to compare comparable organizations across the similar industry or to compare industries or sectors in aggression (Weygandt et al., 2015). It is imperative to note that shares can lead to significant capital losses. This is largely for the…...

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References

Brigham, E. F., Houston, J. F. (2012). Fundamentals of financial management. New York: Cengage Learning.

McClure, B. (2017). Beta: Know the Risk. Investopedia.

Moles, P., Parrino, R. and Kidwell, D. S (2011). Corporate finance. Hoboken: John Wiley & Sons.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting. Hoboken: John Wiley & Sons.

 

Investments are the assets or items purchased with the anticipation to generate the income in the future. In the economic sense, investments refer to the goods and services purchased and not consumed today for the purpose of generating wealth in the future. Similarly, going to a university or building a factory to produce goods and services are the examples of investments. Within a financial environment, investors purchase assets with the hope that they will appreciate in the future, thus, creating wealth for the investors. Examples of investment in the financial circle include purchasing of stocks, or real estate property with the anticipation that they will appreciate in the future. Despite the benefits that can be derived from the investment purpose, the investment is not something an individual can take lightly. Investors are to implement a careful planning to reap the benefits of an investment. Typically, an investor can lose his…...

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Reference

Costa, D. (2011). The Portable Private Banker Investing Efficiently through Mutual Funds and ETFs. UK. CreateSpace Independent Publishing Platform.

Morningstar (2014). Exchange Traded Funds, Morningstar website. Avaliable from:

 http://news.morningstar.com/etf/Lists/ETFReturns.html 

Morningstar (2014). ProShares Ultra Nasdaq Biotechnology BIB, Morningstar website. Avaliable from:  http://performance.morningstar.com/funds/etf/total-returns.action?t=BIB&region=usa&culture=en-U.S .

Understanding financial risk can help individuals make better investment decisions by providing them with the knowledge and tools to assess and manage potential risks associated with different investment opportunities. By understanding the various types of financial risks, such as market risk, credit risk, liquidity risk, and interest rate risk, investors can make more informed decisions about their investment choices.

Additionally, understanding financial risk can help individuals to establish realistic investment goals and develop a well-diversified investment portfolio that can help mitigate risks and maximize returns. By considering the level of risk they are comfortable with and their investment time horizon, individuals....

Understanding Financial Risk: A Key to Informed Investment Decisions

Financial risk is an inherent aspect of investing. It refers to the possibility of losing some or all of the invested capital due to adverse market conditions, economic downturns, or other unforeseen events. Comprehending the nature and extent of financial risk is crucial for individuals to make informed and responsible investment decisions that align with their financial goals and risk tolerance.

Assessing Risk Tolerance

The first step in making sound investment decisions is to assess one's risk tolerance. This involves evaluating how comfortable an individual is with the potential for losses. Risk tolerance is....

Investment management Risk Analysis Of Infosys
Infosys is a multinational corporation that provides business consulting, information technology, and outsourcing services. As an investment option, Infosys has been a popular choice for investors looking to diversify their portfolios and potentially benefit from the growing demand for technology solutions in the marketplace. However, like any investment, Infosys carries its own set of risks that must be carefully analyzed and managed.
One of the key risks associated with investing in Infosys is the volatility of the stock price. As a publicly traded company, Infosys' stock price is subject to fluctuations based on market conditions, interest....

1. The choice between stocks and bonds in an investment portfolio can significantly impact the overall risk and return profile of the portfolio.

2. While stocks have historically provided higher returns over the long term compared to bonds, they also come with higher volatility and risk.

3. Bonds, on the other hand, are generally considered safer investments due to their fixed income nature, providing a more stable source of returns but with lower potential for growth.

4. The allocation between stocks and bonds in a portfolio plays a crucial role in determining the portfolios risk-adjusted return, known as the Sharpe....