• Blaire


1 General background of the companies included in your investment portfolio

Short list three (3) companies according to steps explained on the previous page (the company list is provided on Moodle in the Excel file in the “assignment resources” folder). Verify that each selected company has been trading on the Australian Securities Exchange (at least) between July 2016 and July 2018. Briefly describe the profile of each company (you may comment on, for example: nature of the business, industry and age of your company).

(5 marks)

2 Investment portfolio formation and analysis (i)

Collect monthly share price data for the selected three companies between July 2016 and

July 2018. Calculate realised monthly return each period for each of the selected companies using share prices between July 2016 and July 2018 (note that you are permitted to use a longer investment period if data is available for your selected companies). (5 marks)

(ii) Calculate average monthly return, variance, and standard deviation of returns for the three companies, respectively, using the realised returns you calculated in previous step. (5 marks)

(iii) Construct the least risky investment portfolio with your three companies, assuming there is no short selling of stocks in the portfolio (i.e. the weight of each stock is greater than or equal to zero). (5 marks) [Hint: use ‘Solver’ in the Excel data ribbon to solve for the minimum risk solution by changing weights of stocks in the portfolio and adding constrains on weights, check add­ins if ‘Solver’ is not visible/selected]

(iv) Estimate at least three (3) points for the efficient frontier for your three­stock portfolio, assuming there is no short selling of stocks in the portfolio. Use Excel to graph the efficient frontier. (10 marks)do not need risks returen market returen

(v) Discuss issues related to diversification of your portfolio (think about the relationship between risk and return) ­ up to maximum of 500 words. (10 marks) open question whhat part can be diversification of your portolio market return but in this part you need to download the market return and risks return