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Risk and Return Tradeoff

In: Business and Management

Submitted By jsears2003
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Risk and Tradeoff Memo
Joe A. Sears
April 13, 2015
Richard E. Smith

Risk and Tradeoff Memo
To: Rainier Ekstrom
From: Joe A. Sears
Subject: Portfolio Selection and Investment Strategy According to risk and yield as well as the detailed assessment, the decision to select four investments was of high regards, in addition to making a choice to minimize risk, in addition portfolio diversification, which assisted in the reduced risks. In order to assist in making the correct decisions there are particular pieces of information of a company that is needed to help form the correct decision. Using this information assisted in arriving at selection of investments for Casta Bonita Ceramics.
The four investments I decided on are Desktop, Inc. Leviathan Defense, Trans conduit, Inc., and Goldstein & Delaney Bank. By using diversification, techniques will help to achieve the highest returns. Portfolio diversity is essential to be considered when making proper implementations and decisions.
The amount allotted for this portfolio is $800,000.00, amounts invested in each area of the portfolio is $216,327.00 in Desktop Inc., $175,939.00 in Levinthal Defense, $144,000.00 in Trans Conduit, Inc. and $221,348 Goldstein & Delaney Bank, totaling $ 757,614.00, with $42386 for cash Portfolio risk , Risk =17.19% with a return of 9.20%the Sharpe ratio is 25.86%.
It was essential to have a better continuing portfolio for better income opportunity that made it a great investment possibility. The “budget allotted was $800,000” (Bodie, Kane, Marcus, 2008); for that reason my job was to set aside money in a way ensuring the realization of maximization of the portfolio yield. Exact guidelines regarding the “portfolio risk mentioned it couldn't go beyond 22%” (Bodie, Kane, Marcus, 2008). To appraise the risk as well as yield I designed a reference to the “Sharpe ratio”....

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