PORTFOLIO INVESTMENTS AT RISK

By Group 1

Create by :
Alfi Hasanah 2010631030001

Nadia Retno Widiarti 2010631030171

Table of Content :
1. Understanding Investment Portfolio
2. Problem of Investment Portfolio
3. Types of Investment Portfolio
4. Portofolio 1 risk Free Assets and 1 Risky Assets
5. How to Create an Investment Portfolio
6. Example of an Investment Portfolio
 Understanding Investment
Portfolio

investment portfolio is a collection of securities or instruments

investments owned by individual investors or companies.

So, in an investment portfolio there can be various investment

instruments such as money market mutual funds, shares, bonds, P2P
lending funding, gold, and others.
 Problem Investment
Portofolio

What are the types of capital markets?

What are the benefits of the capital market?
How do capital markets function?
What is an example from the capital market?
What are the objectives of the capital market?
Types of Investment Portofolio

Income Portofolio An income type portfolio is a portfolio created with

the aim of earning regular income

Growth Portofolio this type of portfolio focuses on the growth of the

assets or investment instruments you choose.

Value Portofolio This type of portfolio is usually applied to stock

investments. Your goal in investing is to get high profits by buying
shares at low prices.
 Portofolio 1 Risk Free Asset &
1 Risky Asset

Allocation and Investment

Y = % of assets at risk (P)
1 - Y = % risk free assets (F)

Risk-free assets = T : Bills

Risky assets : stocks

Combination or Complete Portofolio
Expected value of return
E (rc) = Y E (rp) + (1-Y) rf

Risk level

Capital Allocation Line

Reformation

Substitution
Example :
Risk - free assets Risk level
Rf = 7% sigma c = 0,75 (0,22)
Sigma f = 0% sigma c = 0,165
sigma c = 16,5%
Risky assets
E (rp) = 15% Reward to variability ratio
sigma p = 22%
Y = 0,75

Return rate CAL line equation

E(rc) = 0,75 (0,15) + 0,25 (0,07)
E (rc) = 0,13
E (rc) = 13%
How to Create an Investment
Portofolio
Set investment goals related to the time period
Determine your investment risk profile
Determine the composition of the investment portfolio
Preparing capital for investment
Diversifying investments
Balancing the portfolio between return and risk
 Example of an Investment
Portofolio
Aggressive
The composition you can choose is an investment instrument of 80% value
investing and 20% growth investing. The types of instruments that can be
chosen are 80% capital to buy shares at low prices with high intrinsic value and
20% to buy company bonds.
Moderate
The composition you can choose is a 50% investment instrumentvalue investing
and 50%growth investing. The type of instrument that can be chosen is 50%
capital to buy shares and 50% to buy government bonds.
Conservative
The composition you can choose is a 50% investment instrumentincome
investing and 50%growth investing. The type of instrument that can be chosen
is 50% of capital to be invested in deposits and 50% to buy fixed income mutual
funds.
Case Study :
You place 70% of your investment funds in stock mutual
funds which provide an expected return of 20% and a
standard deviation of 24%. The remaining investment funds
are then placed in bond mutual funds which have an
expected return of 8% with a standard deviation of 6%.
These stock and bond mutual funds have a correlation
coefficient of 0.4. What are the expected returns and risks
of the portfolio you formed?
Discussion :
Yield
Step 1 :
Find the weight of investment funds placed in stock mutual funds and bond
mutual funds.

Assume
Ws = weight of investment funds in stock mutual funds
Wb = weight of investment funds in bond mutual funds

From the question we get the following information:

Ws = 0.7
Wb = 0,3

Step 2 :
Calculate the portfolio return rate.

E(Rsb) = Ws * Rs + Wb * Rb
E(Rsb) = (0,7 * 20%) + (0,3 * 8%) = 16,40%
Risk
The following is a formula for calculating the standard deviation
of a portfolio containing two assets.

From the question we get the following data:

Ws = 0.7 andWb = 0,3

σѕ = 24% and σb = 6%
r₁,₂ = 0,4

Ssb = 17,60%
Work Cited!!
Eni Suharti, S.E, M.Ak, et al. “INVESTMENT MANAGEMENT AND PORTFOLIO
THEORY.”

"Understanding Investment Portfolio, Objectives and Types."People's

capital, 22 June 2022, https://www.modalrakyat.id/blog/portofolio-
investasi. Accessed 29 September 2023.

https://www.modalrakyat.id/blog/portofolio-investasi. Accessed 29
September 2023.
Thank You!