Portfolio Management. Literature & Language. Term Paper (Term Paper Sample)

Portfolio Management
Name
Institution
Portfolio Management
Investment returns refer to the cash flows generated either above or below the amount of capital invested. It is therefore possible to have both positive and negative investment returns. The Best case returns are achievable under optimistic market conditions for a given investment whereas the worst case returns may arise out of poor market investment performance. This paper analyzes various portfolio combination scenarios involving a number of stocks. In this case study, holding the stock of Alta Inds’ yields the highest expected return while Repo Men’s stock has the lowest expected returns. The return on an investment that costs $1000 and is sold after one year at $1100 is 10% given as (($1100 -$1000)/$1000). Given a required rate of return one can then discount this return to its present value.
Treasury Bills are government issued securities and they therefore have little to no risk because their collateral is based on the sovereignty and continuity of government and not the economic performance of a country (Brentani, 2003). The question as to whether treasury bills promise a completely risk free return can be answered in both the affirmative and the negative. In the affirmative it can be argued that the stability, continuity and future of governments in the developed world are unquestionable hence the risk of default is nil. However the same cannot be said of all countries, just recently the case of Greece’s default in its debt obligations has cast some doubt over this assertion (Manolopoulos, 2011).