RETURN PORTFOLIO ANALYSIS

RISK AND RETURN  PORTFOLIO ANALYSIS

To check how much return and risk will be faced by investor on portfolio investment is called risk and return protfolio analysis

In this question we show only how to calculate return.

Suppose after analysis we get these results    
Pepsi E(R) = 12%    S.D= 9%        amount=50000
Nestle E(R) = 20%  S.D= 12%       amount=30000
Lucky Cement = E(R) = 10%  S.D= 5%     amount=20000
what will be tatal risk and return?

Portfolio Return:

Rp = ∑W x  E (R) 

Rp = Return on portfolio
E(R) = Expected return
∑W = weights

what formula will be for three securite return calculation

Rp = Wa x  E (R)a + Wb x  E (R)b +Wc x  E (R)c

Weight: The portion of your investment amount invest in a single security is called weight.

Weight of single security = single security amount / total all securities amount
Tatal amount = 50000 + 30000 + 20000
                   = 100000
Pepsi weight or Expected return
Wa= 50000/100000 = 0.5     E(R)a =  12/100 = 0.12      

Nestle weight or Expected return
Wb = 30000/100000 = 0.3      E(R)b = 20/100 = 0.2
    
Lucky cement weight or Expected return
Wc = 20000/100000 = 0.2      E(R)c = 10/100 = 0.1

Put the all values

Rp = Wa x  E (R)a + Wb x  E (R)b +Wc x  E (R)c

Rp = (0.5 x 0.12) + (0.3 x 0.2) + (0.2 x 0.1)
     = 0.1400  or 14% Expected return  


INVESTMENT AND PORTFOLIO MANAGEMENT
INVESTMENT VS SPECULATION AND GAMBLING
TYPES OF INVESTOR
INVESTMENT COMPANIES
TYPES OF MUTUAL FUNDS
TYPES OF BONDS FUNDS
MONEY MARKET FUNDS
SECURITIES MARKET
TYPES OF INDEX
TYPES OF BROKERS
BROKER'S ACCOUNT
MARGINAL ACCOUNT
ORDER AND ITS TYPES
RISK AND ITS TYPES
RETURN PORTFOLIO ANALYSIS
RISK PORTFOLIO ANALYSIS
RISK AND RETURN OF AN INDIVIDUAL SECURITIES
ANALYSIS OF COMMON STOCK VALUATION
CAPM MODEL (CAPITAL ASSET PRICING MODEL)
MARKOWITZ MODEL




MBA NOTES INVESTMENT AND PORTFOLIO MANAGEMENT