Examine your practical understanding of the key financial ideas, concepts, debates, issues and tools presented in the module with an emphasis on modern portfolio theory.

PART A: OPTIMAL CAPITAL ALLOCATION (50%, 2,000 WORDS)
Objective: Examine your practical understanding of the key financial ideas, concepts, debates, issues and tools presented in the module with an emphasis on modern portfolio theory.
Description: You are an investment analyst in a large financial institution. A client enquires about a potential investment in two stocks. Her investment budget is $1,000,000 and her utility has the form:
𝑈 = 𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑅𝑒𝑡𝑢𝑟𝑛 − 1／2＊𝑅𝑖𝑠𝑘 𝐴𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟 ∙ 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒
Using a profile investment questionnaire you determine that the client is conservative with respect to risk since her risk-aversion factor (A) is equal to 10. You are required to undertake a thorough investment analysis in order to propose the optimal capital allocation for the client. Your analysis, along with your final recommendation, should be presented in a comprehensive report.
PART B: SHORT-SELLING (50%, 2,000 WORDS)
Title: Should short-selling be prohibited in times of financial distress?
Objective: Examine your ability to critically discuss the advantages and disadvantages of a popular financial practice presented in the module.
Description: During the recent financial crisis of 2008, a number of countries worldwide decided to prohibit short-selling. You are required to critically analyze the underlying rationale for this decision and discuss whether you agree or disagree with it.