Construction and Evaluation of an Equity Portfolio
Overview:
Construction and Evaluation of an Equity Portfolio ASSESSMENT CRITERIA The assessment is base-d on the successful completion of the following tasks as they are describe-d in more detail in the sequel: Scholarly presentation, including clear and appropriate referencing. Also Initial Portfolio Selection.
Data and information collection on the selected stocks. Stock and Portfolio Analysis. Portfolio management and restructuring based on well-justified arguments and techniques. Portfolio performance evaluation. Issues taken into account: Mature grasp of relevant ideas and concepts. Clear, focused and coherent arguments. Lastly, Critical and analytical approach to theories and practical examples Marks are allocated equally over each task.
DETAILED DESCRIPTION
Each student should construct a portfolio consisting of any three stocks listed in the New York Stock Exchange. An amount of USD 100.000 must be EQUALLY ALLOCATED across the three stocks, without applying any transaction fees, at, 1 January 2017 closing prices.
The student should deliver a report consisting of the following: The number of shares purchased at (01/01/2017) closing prices and a list of monthly adjusted closing prices starting from 01/01/2017 up to 01/01/2022 (61 observations) and the relevant monthly returns (60 observations).
Therefore, The risk and the (average and total) rate of return of each stock and your portfolio. Also compare the risk of such a portfolio with those of each individual stock and comment on your result. However, does the portfolio succeed in risk reduction? The covariance and correlation across stocks. Briefly comment on results. Choose two additional alternative weighting schemes for your portfolio (e.g. 50% in stock A, 25% in stock B and 25% in stock C). Compute again the historical (total and average) return and risk of the portfolio under these schemes and critically comment on your results.
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