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Research Proposal for Portfolio Management in Banking,IT and pharmaceutical sector

Research Proposal for Portfolio Management in Banking,IT and pharmaceutical sector

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Published by zalaks
RESEARCh proposal for portfolio management
RESEARCh proposal for portfolio management

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Categories:Types, Research
Published by: zalaks on Jun 29, 2013
Copyright:Attribution Non-commercial


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This topic is substantially important in taking investment decision in the stock market.Portfolio management will help one in identifying those securities which will help investor todeploy his funds on those securities which will increase the return for given level of risk or which will decrease the risk for given level of investment.By using portfolio management tools like risk-return analysis, Markowitz model, sharpmodel here we have to identify those securities which will maximize our return on fundsdeployed.
Short Literature Survey
Portfolio management
Portfolio management is the professional management of varioussecurities(shares, bondsand other securities) andassets(e.g.,real estate)in order to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pensionfunds, corporations, charities, educational establishments etc.) or private investors (bothdirectly via investment contracts and more commonly viacollective investmentschemese.g.mutual fundsor exchange-traded funds).
Each of the investment avenues has their own risk and return. Investor plans hisinvestment as per this risk 
return profile or his preferences while managing his portfolioefficiently so as to secure the highest return for lowest possible risk. This in short is the portfolio management.
Portfolio management is the process of encompassing many activities of investmentin assets and securities which includes planning, supervision, timing, rationalization, etc. in
selection of securities to meet investors‟ objectives.
Investment management is the another w
ord which can be used for “portfoliomanagement”
Portfolio Management involves time element and time horizon. The present value of future return/cash flows by discounting is useful for share valuation and bond valuation. Theinvestment strategy in portfolio construction should have a time horizon, say 3 to 5 year; to produce the desired results of say 20-30% return per annum.Besides portfolio management should also take into account tax benefits andinvestment incentives. As the returns are taken by investors net of tax payments, and there isalways an element of inflation, returns net of taxation and inflation are more relevant totaxpaying investors. These are called net real rates of returns, which should be more thanother returns. They should encompass risk free return plus a reasonable risk premium,depending upon the risk taken, on the instruments/assets invested.
Portfolio management is a continuous process. It is a dynamic activity. The followingare the basic operations of a portfolio management.a)
Monitoring the performance of portfolio by incorporating the latest market conditions. b)
Identification of the investor‟s objective, constraints and preferences.
Making an evaluation of portfolio income (comparison with targets and achievement).d)
Making revision in the portfolio.e)
Implementation of the strategies in tune with investment objectives.
Interest, dividend or appreciation of investment is called return which is used to evaluate the performance of the investment. There can be of two types of return.
Expected return
Expected return is the anticipated return.
Realized return
Realized return is actually earned income of the investors.
Risk & uncertainty
are an integrate part of an investment decision. Technically „risk‟ can be
defined as situation where the possible consequences of the decision that is to be taken are
known. „Uncertainty‟ is generally defined to apply to situations where the probabilitie
scannot be estimated. However, risk & uncertainty are used interchangeably.
Types of risks
1. Systematic risk: -
Systematic risk is non diversifiable& is associated with the securities market as well as theeconomic, sociological, political, & legal considerations of prices of all securities in theeconomy. The affect of these factors is to put pressure on all securities in such a way that the prices of all stocks will more in the same direction.
2. Unsystematic Risk: -
The importance of unsystematic risk arises out of the uncertainty surrounding of particular firm or industry due to factors like labour strike, consumer preferences and management policies. These uncertainties directly affect the financing and operating environment of thefirm. Unsystematic risks can owing to these considerations be said to complement thesystematic risk forces.
Risk Return relationship
The higher the risk taken, the higher is the return. But proper management of risk involvesthe right choice of investments whose risks are compensating.
GOVT. BondDebentures /BondsInsurance companies/post office serviceFixed Deposits of companiesMutual fundsEquity of blue chip companiesRiskEquity of venture capital funds
   R  e   t  u  r  n
Risk free Return

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