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Report on Investment Theory

In:

Submitted By tanjin
Words 4873
Pages 20
1. Introduction:
For volatile markets, Sir John Templeton said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”
For our investment simulation project, we started out with TK. 10, 00,000 cash at our disposal which we invested in the trading of Dhaka Stock Exchange (DSE) stocks, which is a bullish market. However, investing in such a volatile market required good initial research, investment strategies, and a well-diversified portfolio .Since this was a three-phase project, some adjustments were made to offset market downturns and ultimately increase the portfolio value in our account. As the market was unpredictable, our strategies were focused on risk minimization as well as loss minimization by diversifying our portfolio & by observing other measurement tools like Sharpe ratios, Jensen alpha, correlations & others. In addition our portfolio management was not intensified into these formulas as we also considered some of our predictions about this volatile market & companies. 2. Objective:
The main objective of our project is to build up strong investment strategies to cope up with this volatile market with maximizing after tax wealth. To do this we realized that diversifying our portfolio would be the best strategy & that’s why we tried to invest in more than ten industries so that downturn in one sector can be offset by the rise in another sectors stock return. Therefore, while determining our investment mix, we allocated our asset among investments in various industries. Thus, in our asset allocation process, we included investments from industries such as bank, steel, textile, and, pharmaceutical those were correlated with each other negatively.

3. Asset Allocation: * Phase 01:
For our project’s phase 1, we have invested Tk. 1000106.75 in Dhaka Stock Exchange on 1st

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