Foundations of Financial Analysis and Investment assignment help

Foundations of Financial Analysis and Investment assignment help

Foundations of Financial Analysis and Investment assignment help
Ass’g’iment Question
Provide an account of the development of portfolio theory and of the central ideas
of that theory.
Using text, graphs, and (if necessary) numbers/ calculations, explain, the concept
of the dominant portfolio. How does this relate to the portfolio efficiency
frontier?
Outline the main practical drawbacks of portfolio theory that the capital asset
pricing model (CAPM) has sought to overcome?
Further Readings
Markowitz, H. M. (1999). The early history of portfolio theory: 1600-1960. Financial
Analysts Journal, 55(4), 5-16.
Markowitz, H. M. (1991). Foundations of portfolio theory. Journal of finance, 469-
477.
Harry M. Markowitz, ‘Portfolio Selection’, Journal of Finance, 7(1) (1952): 77-91.
Harry M. Markowtitz, ‘Market efficiency: a theoretical distinction and so what?,
Financial Analysts Journal (September/ October 2005): 17-30.
‘Modern Portfolio Theory’, Bank Investment Consultant, 14(6) (June 2006): 36-37.
William F. Sharpe, ‘Capital asset prices: Atheory of market equilibrium under
conditions of risk’, Journal of Finance, 19(3) (1964): 425-442.
Wagner, W. H., & Lau, S C. (1971). The effect of diversification on risk. Financial
Analysts Journal, 27(6), 48-53.
Approaching the question
Whilst some questions may refer to a particular study unit of the module, they are
aimed to span issues from across the module. It is, therefore, recommended you
reflect on the issues that you have encountered throughout the module when
answering. The quality of your answer will depend on the argument that you put
forward in answer to the question and not solely on defining concepts that the
question refers to.
The assignment question is split into three broad sections. As an approximate
guide, distribute your effort in answering these three sections in a proportion of30% 50% 20% This does not mean that each sub-question is worth that % of thetotal mark, as the overall mark will depend on how well these answers worktogether rather than as discrete sub-sections.The first part of the question refers to the background of portfolio theory asdeveloped by Harry Markowitz but you should aim to also develop an in-depthpresentation of the key ideas/ concepts of Markowitz’s theory describing theirimportance and how they work within the overall theory.For the second part of the question you will need to explain the key concept of thedominant portfolio. You will have to explain and show how this ‘dominance’ isarrived at but also what its implications are in terms of risk and reward. Thejudicious use of examples here will be important. This will also be the case whenmoving to explaining how this dominant portfolio relates to the bigger marketpicture through your subsequent discussion of the efficiency frontier. It isimportant you show clearly the distinctions between the two which are oftenconflated in discussions and application of portfolio theory. The degree of use ofnumerical/calculative examples/ arguments used here is up to you. It is notenvisaged that an entirely numerical approach is necessary, but some numericalanalysis will likely be necessary in the explanation.Finally, in the last section you are expected to discuss the practical difficulties ofusing portfolio theory and how CAPM provides a neat way of dealing with thesedifficulties. While you need to understand CAPM to the degree that this enablesyou to discuss the practical benefits it brings to arriving at a useful and robustenough risk/reward picture of investment decisions, you are n_ot expected toprovide a detailed picture/ account of CAPM or of the many arguments for andagainst the model.
Assessment Criteria
In addition to the criteria outlined above and in the Programme Handbook, the
following points may also help you produce a good piece of work:
You must address the question asked and not try to redefine it to allow you towrite about something else. ‘Not answering the question’ will result in asignificant loss of marks.
Your essay must be properly referenced:
0 only sources cited in the text of your answer should be included in thebibliography;
0 all sources (including those for any numeric examples used) should beacknowledged;
0 there should be no references in your answer to sources which are not inyour bibliography BUT if you have not consulted the reference directlyyourself you should indicate in the text of your answer the secondary sourcefrom which it comes. It is this secondary source which should be in yourbibliography.
0 While selective quoting within quotation marks is acceptable, listing areference in the bibliography does not make it acceptable to copy sections of abook or article into your answer. You must aim to summarise more extensivepoints in your own words.
0 Plag’arism is regarded as a most serious instance of academic misconductand is dealt with accordingly.
0 Being asked to discuss something is not the same as being asked to list things. Adiscussion will consider alternative points of view and your own thinking andevaluation of these points should be central in the discussion of the topic.
It is expected that you will consult academic and professional iournals as well as
textbooks.
Many textbooks cover much the same information and you are only duplicating this
when you consult numerous different textbooks.
Textbooks tend not to have very up to date content and iournal sources are vital
for this.
At the same time, indiscriminate referencing is no guarantee of a good assignment.
Part of the assessment is to see how able you are to identify and use selectively
the most relevant and reliable sources.
In addition to the above, the following points will also contribute to a better
quality assignment:
0 Evidence of a good understanding of key concepts and ideas
0 An argument development that hangstoget her as a whole
0 Inclusion of examples/ illustrations where relevant
o Sibstantiated conclusions
Last but not least, some creativity and originality
Word limit: 3,000
Submission Instructions:
Please visit the Assessment section of Blackboard for further information and
guidance on submitting your assignment electronically. Only one file in the
specified format can be submitted.
0 Please insert the assignment question to your submission.
Retain your electronic submission receipt.It you have questions about the submission of your work please contact theSchool of Management for assistance, before the deadline date.
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