Make an efficient multiple-asset portfolio and analyze the effect of adding a risk-free asset to a portfolio containing risky assets.

FINANCIAL MARKETSBCO224-Group AFinal Evaluation Investments: Delineating an Efficient Portfolio

Individual task

Students should read the Harvard Business School case study entitled ‘Investments: Delineating an Efficient Portfolio’ and answer the following questions. Students should notethat the risk of the portfolio should not be more than 10% per year. Students should use the dataset in the Stock Spreadsheetfor their calculations

.Key contextual elements should includerisk diversification, portfolio theory, efficient frontier, Sharpe ratio, correlation analysis, risk and return.

General instructions:

oMake a two-asset portfolio and examine how risk is diversified.

oMake an efficient multiple-asset portfolio.

oMake an efficient multiple-asset portfolio and analyze the effect of adding a risk-free asset to a portfolio containing risky assets.

Title page, written body, along with a bibliography of any written references, images, or diagrams used (if applicable). NOTE: Formal Written Reports must include a Title Page, Table of Contents, and Appendixif needed.

Formal Written Report saved and uploaded to Moodle in PDF format.Formalities:

Word count: 1000/1500words

Cover, Table of Contents, References and Appendix are excluded of the total word count.

Font: Arial 12,5 pts

Text alignment: Justified.

The in-text References and the Bibliography have to be in Harvard’s citation style.Submission:Week 8–Via Moodle (Turnitin). By no later than Sunday, September20that 23:59 (11:59pm) CEST.Weight:This task represents60% of your total grade for this subject.It assesses the following learning outcomes:

Outcome 1:Be familiar with selecting optimal portfolios including stocks and bonds.

Outcome 2: Have an understanding of the key concepts that drive capital allocation in the light of risk.