You are the United Kingdom investor of £2,000,000. You are investing the 2 million british pounds into 6 sectors: real estate, land, transportation, equity, banking instruments and construction materials commodity.
First and foremost, you need to find 6 specific companies for the 6 sectors and you should choose only investments whose prices are quoted in the Financial Times, or are obtained from other reliable sources, which you must identify.
Cash balances can be invested to earn LIBOR – 1%. Any borrowing will be at
LIBOR + 1%.
After you chose the 6 specific reputable companies, the most important 4 things you must do are:
1. You should compute portfolio risk and return as part of the Markowitz
framework
2. You should investigate the use the Sharp model in the context of portfolio
re-pricing and draw clear conclusions of its usefulness.
3. Clearly state and justify your portfolio management style (i.e. active versus passive portfolio management – which one do you use and why).
4. Identify and use (if and when appropriate) any other financial information
such as 1) share prices and headline impact on share price, 2) retained
earnings, 3) dividend payouts, 4) ratios such as liquidity, efficient use of
assets, leverage, and profitability, and other financial information you would
consider necessary to create a good understanding of the “attractiveness” of
each investment.
Interest should be calculated daily and included in
valuations. Allow for dividends and other distributions.
Your entire well diversified wealth growing portfolio OR a part of it should
be fed to a portfolio simulation engine online with results observed daily, but
recorded weekly.
If the entire portfolio could not be re-created in one single
portfolio engine or platform, you can either use more than one platform (i.e.
Bloomberg, FX, Etc.) or simulate only part of it through an online portfolio
engine. You should properly justify you choice and any possible technical
constrains.
You should manage it in a dynamic fashion, with transactions made at
appropriate points in the price evolution path of a well-diversified portfolio.
You should investigate the effects of portfolio optimization through a
comparative portfolio pricing framework.
Use relevant articles, journals in your research (which you should clearly
identify) to support your work in setting up and managing wealth through a
well-diversified investment portfolio.
You should provide details of the transactions you have undertaken, with a critical
evaluation of these transactions in the context of your investment strategy,
identifying the theoretical basis for your investment decisions.
Your work should be referenced, and contain a list of the sources of (i) your
evidence and (ii) the theory that underpins your analysis and commentary.
I just want to say straight away – this is an emergency paper, I need to have it ready as soon as possible, so I can not give much in the way of extension, need it ready within 6-8 hours.
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