Finance modelling assessment
1. Briefly explain the concepts of expected return, standard deviation, and correlation (in the context of share prices), and discuss their importance in
portfolio management. (Issues you should consider here are the relationship between risk and return, and how portfolio risk can be reduced through
diversification)
2. Create a spreadsheet model to find efficient portfolios of shares, and derive the efficient frontier. Give a full explanation of your modelling procedures
and the results that you obtain.
3. Introduce a risk-free asset into the model and find the optimal portfolio of shares. Discuss what happens to this portfolio as the risk-free rate of return changes.
4. Introduce a risk aversion factor into the model and discuss its effect upon the optimal complete portfolio.
5. Discuss the limitations of this approach to portfolio selection.
As well as a spreadsheet file, you need to submit a report (in Word) explaining all five parts of the answer. Credit will be given for demonstrating that you have understood the procedures and the results. The word limit is 1500 words.
***About referencing number i really dont know you chose the right number.
Referencing Requirements:
BooK, journal, article.
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