Analysis of Investment and Risk Assignment Example | Topics and Well Written Essays - 1000 words

Analysis of Investment and Risk - Assignment ExampleIn applying the methods of mitigating attempt, making a portfolio is one of them which is, in fact, the most suitable and widely used methods in the whole investment industry (Cinnamon & Larsen, 2006).1) Making of Efficient Portfolios comprising of 10 stocks in total. The companies which run through been chosen for this purpose atomic number 18 BG Group, BHP Billion, BP, Barclays, British Ameri lav Tobacco, HSBC, Glaxo Smith, Glencore, Unilever, Tesco.a) Short selling is one of the noteworthy activities of investment, which crockeds to sell the assets without having its physical possession. The number one part of assignment requires making a portfolio with including short selling allowed. For this purpose, following tabular data has been coverFrom the tabular formation given above, it can be seen that lots of fluctuation are there among the mean run off and standard deviation. The portfolio make with this particular stance wo uld yield a return of 0.72% and a risk level of 3.53%.In this table, it can be found that short selling is not allowed hence, an investor cannot take some(prenominal) position for a stock which has negative return. The portfolio return is 0.958% with standard deviation with the same 3.53% level.c) In this part, the return would be the same as in the section b because short selling is not allowed and 25% can be allotted to a single share. From this particular analysis, it can be said that the portfolio, which has been made without short selling, would yield the higher proportion of return in lesser risk adoption as compared to the portfolio in which short selling is allowed.In this scenario, in which portfolio has been diversified between 8 stocks and 2 stocks Coca-Cola and Google have been given 0 proportions. The average return of this portfolio is 0.822% with the same level of risk as illustrated above. From the analysis, it can be easily found that there are four stocks, which a re above the level of CML while otherwise 6 stocks are located on a lower floor the CML hence there are only four stocks that can fill the gap of capital of an investor, while all other asset or shares would come below the level of average return.