INVESTMENT PORTFOLIO

Investment Portfolio

Investment Portfolio

Investment Portfolio

Company Name

Closing Price

Number of Shares Acquired

Beta

Value of Investment

Stock Weight

Weighted Average Beta

 

 

 

 

 

 

 

CHAMBERLIN PLC 144.50 150

1.3

21675

0.22

0.28

CHRISTIE GROUP 61.00 174

1.4

10614

0.11

0.15

ADEPT TELECOM 35.75 120

0.9

4290

0.04

0.04

ALLIANCE PHARMA 27.25 137

1.7

3733.25

0.04

0.06

BAYFIELD ENERGY HLDGS PLC 74.50 181

0.6

13484.5

0.13

0.08

BEOWULF MINING 30.50 130

1.1

3965

0.04

0.04

DQ ENTERTAINMENT PLC 72.50 135

1.5

9787.5

0.10

0.15

HEAVITREE BREWERY

167.50 150

0.8

25125

0.25

0.20

STEPPE CEMENT 40.50 160

0.75

6480

0.06

0.05

MANX FINANCIAL GROUP PLC 8.38 101

1

845.875

0.01

0.01

 

 

 

 

 

 

 

Total

 

1,438

 

100000

 

1.062

All Charts and stock prices and company's financial data are taken from (London Stock Exchange, 2011).

Approach to Diversify Investment Risk

The approach I have taken in this limited portfolio investment scenario is industry diversification. As the spread sheet is showing that the ten companies in which I have invested are from different business sectors ranging from telecom to cement, financial to brewery and pharmaceutical to the entertainment industry. This diversification reduces to risk of loss in investment. If the performance of one company decreases due to the industry trend, the other companies will not necessarily go down.

The relationship between risk and reward is essential in the design of investment portfolios. Diversification in portfolio investment seeks to obtain the optimal mix of assets to maximize profit while minimizing risk. Under this premise, the investigation focuses on the classical theory of investment portfolios by adding to this heuristic criterion (Lintner, 2005).

The concept of risk in Investment

Definition of risk in the field of finance and investment is "the degree of fluctuations that occur in the expected return", or the possible deviation of the effective yield of the expected return on investment.

The division of risks

Risk can be classified from the perspective of thought on the basis of financial causes arise where the risk is often either for internal reasons (risk of non-regular) or to external causes.

Risk irregular: The fluctuations in the expected return of all existing investments, which was attributed to internal factors specific to the entity, such as poor efficiency, which administrators can control and avoid using a curriculum management strategy - the natural approach to coverage - based on diversification of a portfolio.

Systemic risk : It is caused by conditions of economic activity in general cannot be avoided or controlled, such as fluctuations in interest rate risk or foreign exchange, although it is possible to reduce the size using one of the curriculum management strategy - approach to financial coverage - based on the use of financial instruments innovative.

When an investor decides to make investments, consultation is necessary and vital to take into account two factors, profitability and risk. The return on the investment obtained by the investment risk and uncertainty regarding the outcome future investment. Known factors that influence a financial investment, a portfolio is defined investment as a combination of assets or individual titles so that a combination of individual titles almost always less risky than any individual title dual. Most of techniques for building and managing the investment portfolios are based on the majority of portfolio selection (Lintner, 2005). The theory states that the generation an optimal ...