Portfolio Management Case Solution
Portfolio Management analysis
The term portfolio means to analyse, identify and manage the associate projects, which are subjected to risk and return. In order to handle the portfolio of different companies, fund managers involve in a critical evaluation of managing the stocks of different portfolio companies and conclude the annual results to the investors regarding decisions about the current investment within the selected companies.
In the case, various stock markets are selected to assess the portfolio under the trading of New York stock exchange. Therefore, four stocks under the market are selected to build the portfolio in order to make high returns for the potential investors.
Business Development Corporation
This sector is the most popular in the recent history due to increase in the average market share of the emerging venture capital investment companies. Therefore, the selected companies in this sector have been included in order to assess the expected returns and risks of the portfolio. McKesson Corporation and Terex Corporation are considered the main sectors for the selected portfolio of Business Development Corporation. Following are the factors, which are used to analyse the expected risk and return for the particular analysis.
McKesson Corporation
McKesson Corporation is the most successful company in the field of pharmaceutical and health care operations. It was involved in various merger and acquisition of different small firms in order to increase the market shares through expanding the internal operational activities for higher profits.
Factors under Portfolio analysis
The first factor to consider under the portfolio is the expected return generated from the historical data of one year. It is the main tool to assess the expected performance of the portfolio for the selected years. On the other side, the standard deviation is high and thus illustrates that the investment will be quite risky because of the fluctuation in shares price.
The prices would go down due to the developing phase of the company, and would allow investors to make certain decisions regarding the interest to hold the share for high profit margins. Therefore, this portfolio is quite better for the investment due to the high expected annual return.
Terex Corporation
Terex Corporation is one of the leading companies in the field of construction and mining. It was involved in various acquisitions of different small firms in order to boost its operational activities and to increase the market share price by increasing the company’s performance. According to the current portfolio, various factors have been analysed to assess the performance of the company for the coming period
Expected return
From the following analysis, it is identified that the summary of the monthly returns shows positive results in the market due to the increasing level of small firms under the acquisition of the major venture capitalist. Therefore, the expected return would tend to increase in the same margin over the number of selected years.
Mean
It is determined from the historical price data of the past year that the price would be less than the last price because of the lower ranges in the initial stage of the sector. This means that various companies were not subjected to the merger and acquisition in the early years of stock. That is why the average prices are low as compared to the last price. However, the expected price mean would tend to increase in the coming period.
Standard Deviation
From the following results, it is identified that the average standard deviation shows less volatility due to the less fluctuated results of the stock prices. Therefore, there is less risk to this portfolio and this allows the investors to make decisions about their investments......................
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