Mathematics for Portfolio Management with Application to Local Financial Market

Ong, Yee Sin (2019) Mathematics for Portfolio Management with Application to Local Financial Market. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

This project is to investigate on portfolio management which helps investors in choosing an optimum way of allocation of their capital or fund. Portfolio management is declared as the way of an investor’s asset is allocated. Investors are assumed to be risk averse which means for the same level of rate of return, investors will choose the portfolio which gives a lower risk. Variance of the portfolio is used to estimate the risk level of a portfolio. Some methods and graphs are shown under this project which gives investors a better investing option and provides investors a better vision on the allocation of funds into his/her portfolio. In the first chapter, we introduced the terms of portfolio and portfolio management to give a better understanding to readers. Besides, objectives of this project are declared under this chapter. After introducing some specific terms used in the portfolio management and stating the objectives of this project, we derived the formula which helps in obtaining an optimum portfolio. Then, in the main chapter, we apply the variance and expected return into the formula obtained. So, in the main chapter we basically work on several methods that help in optimizing the portfolio with application to local financial market. Besides, we also presented graphs that show investors the best investing way.In the last chapter, conclusion and relevant future work are mentioned. Some relevant works that need professional mathematical software to solve are suggested under this chapter so that the result obtained is improved.