Portfolio Management: Analyzing Expected Returns, Risk, and Leverage Strategies

Running head: PORTFOLIO MANAGEMENT
Portfolio Management
Name of the Student:
Name of the University:
Author’s Note:

1PORTFOLIO MANAGEMENT
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................2
Question 3........................................................................................................................................3
Reference.........................................................................................................................................4
Appendix..........................................................................................................................................5

2PORTFOLIO MANAGEMENT
Question 1
The expected rate of return for the stock Sime Darby was evaluated by taking the five-
year monthly stock data where the return of stock was around -0.51% and the risk/standard
deviation of the stock was around 76.45%. The risk free rate was taken at 4.10%, which is the
10 years BNM Treasury Rate1. The expected return and risk of the portfolio was calculated by
taking the various asset combination to determine the optimum portfolio allocation weight. The
optimum portfolio weight would be 100% in Treasury bill rate as stock has given negative return
where the portfolio would earn around 4.10% with zero risk (Appendix 1).
Question 2
Graphical Analysis of Portfolio
1 Malaysia | Government Securities Yield: 10 Years | Economic Indicators (2019) Ceicdata.com
<https://www.ceicdata.com/en/malaysia/government-securities-indicative-yield/government-securities-yield-10-
years>
100% 0% 50% 50% 0% 100% -50% 150%
Return (%) 4.10% 1.79% -0.51% -2.82%
Risk 0.00% 38.22% 76.45% 114.67%
-10.00%
10.00%
30.00%
50.00%
70.00%
90.00%
110.00%
130.00%
4.10% 1.79% -0.51% -2.82%0.00%
38.22%
76.45%
114.67%
Return and Risk
Return (%) Linear (Return (%)) Risk