Investment Analysis and Portfolio Management

Running head: INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
Investment Analysis and Portfolio Management
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
Table of Contents
a. Discussing about the five-asset class by using their AM, GM and standard deviation, while
providing information about the risk and return characteristics of each stock:...............................2
b. Constructing the efficient portfolio and discussing the implications of the five asset efficient
frontier and CAL:............................................................................................................................5
c. Providing an in-depth and critical discussion of the results, while indicating why minimum
variance portfolio is still liked by academics and practitioners and MPT normative:....................8
References and Bibliography:........................................................................................................10

2INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
a. Discussing about the five-asset class by using their AM, GM and standard deviation,
while providing information about the risk and return characteristics of each stock:
Australian
Share
Australian
Bonds
US
Shares
US
Fed
Brent
Oil
Minimum -41.30% 1.50% -37.00% 0.07% -56.60%
Maximum 30.80% 6.80% 33.36% 6.40% 172.60%
Arithmetic Mean 5.45% 4.22% 9.92% 2.27% 16.63%
Geometric Mean 4.27% 4.21% 8.32% 2.25% 7.10%
Risk / Standard Deviation 14.81% 1.64% 17.88% 2.25% 49.69%
Risk / Variance 2.19% 0.03% 3.20% 0.05% 24.69%
Australian Shares (AUD) S&P/ASX 200; with dividends and splits:
The Australian shares have relevantly different characteristics from other assets class in
the segment. However, the risk and return pattern are similar to the US shares, as both the asset
class falls under the same category of investments. Falling under the same category of
investment did not match the relevant levels of breast and reward provided by Australian shares
and US share. Thus, the Australian share market relatively provides an Arithmetic mean of
5.45%, while the geometric mean is at the levels of 4.27%. This mail indicates that the return
fluctuations of the asset is a relatively low where the difference between the Arithmetic and
geometric mean is minimal. Moreover, the standard deviation of the stock is relatively at the
level of 14.81% which indicates about the high level of risk involved in investments. The
maximum return that is provided by the asset class is at the levels of 30.80%, while the lowest
returns from asset are at the levels of -41.30%. On the other hand, the overall variance that is
generated from asset class is at the levels of 2.19%. Hence, it could be identified that asset class

3INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
falls under growth stock, where both risk and return from the investment is relevantly high
(Doeswijk, Lam & Swinkels, 2014).
Australian Bonds (AUD) RBA cash rate in December:
Analysis of the Australian bond cash rate is relatively depicted in the above table where
the Arithmetic mean of the Asset classes at the levels of 4.22%, while Geometric mean is at
4.21%. The truncated difference between both Arithmetic and geometric mean directly indicates
about the low volatility present within the Asset class. The Australian bond market relatively
provides the significant return by reducing the level of risk involved in investment. The overall
standard deviation of the asset is at the levels of 1.64%, while the variance value is at 0.03%. The
low standard deviation and variance value of the asset indicates about the stability in the return
that is provided by the Australian bond market. Moreover, the minimum returns that is provided
by the Asset classes at the levels of 1.50%, while the highest return 6.80%. The low fluctuations
in the maximum and minimum returns of the Asset classes also indicate about the stability and
security that is provided by the Asset to the investors. Thus, the asset class can be classified as a
conservative investment option that can be used by the investors to minimize the risk involved in
investments (Hanlon, Maydew & Thornock, 2015).
US Shares (USD) S&P500: Total Annual Return with dividends:
The uses relatively comprise of the total returns provided by the capital market of United
States where the overall Arithmetic mean is actor levels of 9.92%, while the geometric mean is at
8.32%. There is significantly low difference between the return of geometric and Arithmetic for
US shares, which indicates about the limited volatility present within the Asset class. From the
relevant analysis, it could be identified that the standard deviation of the state is second highest
among all the Asset class which is at the levels of 17.88%, while the variance level is at 3.20%.