Posted: February 2nd, 2015

Analysis of Business Data

Paper, Order, or Assignment Requirements

Note:
Justify your selection of companies in the context of Modern Portfolio Theory (MPT), which emphasises diversification
Modern Portfolio Theory (MPT) says that is not enough to look at the expected risk and return of one particular company stock or share.
By investing in more than one stock, an investor can reap the benefits of diversification.
A key benefit of diversification is a reduction in the riskiness of the portfolio. In other words, the benefits of diversification is not putting all your eggs in one basket!
The risk in a portfolio of diverse individual stocks will be less than the risk inherent in holding one of the individual stocks (provided the risks of the various stocks are not directly related)
So diversification, diversification, diversification is the guiding principle!!