NAME ROLL NO

HARSH ADHIYA 01

KESHAV AGARWAL 02

NEIL GALA 09

ABHISHEK OZA 20

YATIN PRABHU 25

DHAWAL SOLANKI 29

PRESENTED BY:

Portfolio management is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance.

Portfolio management is all about determining strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and much other trade-offs encountered in the attempt to maximize return at a given appetite for risk.

WHAT IS PORTFOLIO MANAGEMENT?

SUCCESSFUL PORTFOLIO MANAGEMENT IS A COMBINATION OF ART & SCIENCE

THE PURPOSE OF PORTFOLIO MANAGEMENT

Higher return on project investments.

Lower organizational risk.

Balanced project portfolio workload.

Increased project throughput.

Shorter project cycle times.

Greater confidence of meeting customer commitments.

PORTFOLIO MANAGEMENT BENIFITS

YOU NEED PORTFOLIO MANAGEMENT WHEN….

FOUR BASIC COMPONENTS OF PPM

What is diversification?

How can we diversify our portfolio?

Advantages of diversification.

Types of diversification.

DIVERSIFICATION

Commit to improving the project system Use project management on all projects Sponsor individual projects Create a project steering process Align horizontally Apply the new accountability Optimize technical processes

KEYS TO SUCCESS WITH PORTFOLIO

TRADITIONAL & MODERN PORTFOLIO THEORY

Harry Markowitz is considered the father of modern portfolio theory, mainly because he is the first person who gave a mathematical model for portfolio optimization and diversification.

Modern Portfolio theory is a theory of finance that attempts to maximize portfolio expected returns for a given amount of risk, or minimize the risk for a given level of expected return

Markowitz Theory advise investors to invest in multiple securities rather than pulling all eggs in one basket.

MARKOWITZ THEORY

MARKOWITZ MODEL-PORTFOLIO

Risk of a portfolio is based on the variability of returns from the said portfolio.

An investor is risk averse. An investor prefers to increase consumption. Analysis is based on single period model of investment. An investor either maximizes his portfolio return for a

given level of risk or maximizes his return for the minimum risk.

An investor is rational in nature.

ASSUMPTION OF MARKOWITZ

CAPM is used to determine a theoretically appropriate require rate of return of an asset, if that asset is to be added to an already well diversified portfolio, given that assets non-diversifiable risk.

Model starts with the idea that individual investment contains two types of risk.

Those are as follows:

CAPITAL ASSET PRICING MODEL

Systematic risk: This are market risk that cannot be diversified away.

Interest rate, recession & wars are example of systematic risk.

Un-systematic risk: Also known as specific risk. This risk is specific to

individual stock and can be diversified away as the investors increases the number of stocks in his portfolio. In more technical terms, it represent the component of a stocks return i.e. not correlated with general market moves.

CAPM-PORTFOLIO

SECURITY MARKET LINE

TESTING THE CAPM

TESTING THE CAPM

All investors: Aim to maximize economic utilities. Are rational and

risk-averse. Are broadly diversified across a range of investments. Are price takers, i.e., they cannot influence prices. Trade without transaction or taxation costs. Assume all information is available at the same time to

all investors. Can lend and borrow unlimited amounts under the risk

free rate of interest.

ASSUMPTION OF CAPM

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