Showing posts with label MGT201. Show all posts
Showing posts with label MGT201. Show all posts

MGT201 Assignment no 1 Solution Fall 2016

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MGT201 Assignment no 1 Fall 2016


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MGT201 Assignment Learning Objective

The students are expected to develop understanding about the concept of two stock portfolio
theory, portfolio risk and expected return

MGT201 Assignment Learning Outcomes

After attempting this assignment, the students would be able to comprehend the concept of two
stock portfolio theory, portfolio risk and expected return

MGT201 Assignment no 1

Suppose you are working on portfolio investment as financial analyst in an SMG Investments and you have been assigned a task to analyze the following situation:

A portfolio consists of two securities namely ABC Petroleum and XYZ bank. Expected risk of ABC Petroleum and XYZ bank are 12% and 14% respectively and weights of these securities
are 75% and 25% respectively. Expected returns of ABC petroleum is 12% while XYZ bank’s expected return is 9.5%.



Now keeping in view the above situation, you need to calculate “Portfolio risk” in case of:
a) Perfect positive correlation
b) Perfect negative correlation
c) Zero correlation
Based on calculation under each case also analyze in which case the risk of portfolio will be the lowest.


Calculate the expected return of this portfolio based on given information of two securities.

Question #3

A recent trend analysis of ABC Petroleum’s share price has shown an increasing trend while XYZ bank’s share price is showing decreasing trend with the time. If both the securities are perfectly negatively correlated and there is equal investment in both the securities, how this trend analysis of share prices will affect the overall return of the portfolio. Also discuss was this a wise decision to add negatively correlated securities in the portfolio? Why or why not?
NOTE: Formulas and complete working is mandatory for question #1 and 2 otherwise marks will be deducted.

MGT201 Assignment Note: 

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MGT201 Assignment DEADLINE:

  • Make sure to upload the solution file before the due date on VULMS.
  • Any submission made via email after the due date will not be accepted.


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  • It is advised to compose your document in MS-Word format.
  • You may also compose your assignment in Open Office format.
  • Use black and blue font colors only.


Please note that your assignment will not be graded or graded as Zero (0), if:
  • It is submitted after the due date.
  • The file you uploaded does not open or is corrupt.
  • It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
  • It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive
Dear students!
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MGT201 Assignment no 1 Solution

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