.

2. TOPIC
 PORTFOLIO ANALYSIS SELECTION; PORTFOLIO THEORY, RETURN
PORTFOLIO RISK, EFFICIENT SET OF PORTFOLIOS, OPTIMUM
PORFOLIO.

3. CONTENTS
 PORTFOLIO MEANING
 PHASES OF PORTFOLIO
 MARKOWITZ MODEL
 MARKOWITZ MEAN VARIANCE MODEL
 EFFICIENT FRONTIRE
 EFFICIENT SET OF PORTFOLIO
 SETTING OF PORTFOLIO
 DIVERSIFICATION
 DIVERSIFICATION OF RISK
 OPYIMUM PORTFOLIO
 EXCEPTED RETURN ON PORTFOLIO

4. MEANING;PORTFOLIO
 It is a collection or combination of financial assets(
shares, debentures, government securities)
 It can also be called collection of physical
asstets(gold,silver,,real estate etc).
 Here, it is used for” investment purpose” and not for
consumption.

5. PHASES OF PORTFOLIO
 Security analysis
 Portfolio analysis
 Portfolio selection
 Portfolio revision
 Portfolio revision

6. MARKOWITZ MODEL
 Modern portfolio theory or portfolio theory was introduced by harry markowowiz with
his paper portfolio selection .
 The markowitz model describe a set of rigorous statisticalprocedures uesd to selest the
optimal portfolio for wealth maximizing/ risk-averse investers.
 The model is describing under the framework of a risk-return tradeoff graph.

7. MARKOWITZ MEAN-
VARIANCE MODEL
ASSUMPTION;
 the return on investment adequately summarises the
outcome of the investment
All investers are risk-averse.
Investors are assumed to be rational
Return could be any suitable measure of monetary inflow
Investors base their investment decision on two criteria
;expected return and variance of return

8. EFFICIENT FRONTIER
 WHAT IT IS?
 HOW IT WORKS?
 WHY IT MATTERS?

9. DIAGRAM

10. EFFICIENT SET OF PORTFOLIO
 IT is the portfolio that offers the highest excepted
return for a given level of risk or one with the lowest
level of risk for a excepted return and the line that
connect all these efficient portfolios is efficient
frontier.

11. GRAPH

12. SETTING UP OF PORTFOLIO
 the portfolio manager will determine how to structure
the portfolio based on the restriction and guidelines in
the portfolio prospectus.
 Portfolio prospectus includes;
 fee
 investment objective
 limitation
 names of the portfolio manager

13. DIVERSIFICATION
 why diversify?
 Higher more consistent return
 Lower risk
 a diversified protfolio will hold a number of
securities
 Diversification is not having all ypur eggs in one
basket
 Losses in some securities should be offset by gains in
others

14. How to get the best
diversification?
 Speard your portfolio among multiple investment vehicles
such as cash,stock,mutual fund.
 Vary the risk in your securities
 Vary your securities by industry

15. Diversification of risk
 TWO TYPES OF RISK;
1. Systematic risk
2. Unsystematic risk

16. OPTIMUM PORTFOLIO
 This comes under the markowitz theory.it states that
the investors will act rationally, always making
decision aimed at maximizing their return for their
accepatable level of risk.

17. SELECTION OF OPTIMUM
PORTFOLIO
 Step 1; use the markowitz portfolio selection model to
identify optimal combinations
 Step 2; consider riskless borrowing and lending
possibilities
 Step 3; choose the final portfolio based on your
preference for return relatives to risk

19. EXCEPTED RETURN ON
PORTFOLIO
 The excepted return on portfolio simply means the
weighted average – the excepted return on individual
securities in the given portfolio

20. formula

21. THANK YOU