1. Portfolio Risk and Return Analysis

1. Construct a high risk and a low risk by allocating equal weights to each stock you have identified in the previous question (1.b).

1. Report on the risk and return of each of the portfolios you have constructed in part a of this question including an assessment of their suitability for investors with varying degree of risk preferences (you may assume that investors also can invest in a risk-free asset).

1. Provide a reflective summary of your understanding of portfolio management theory and practice. Use lessons from the exercises you have done in previous sections.

Step 1- DATA: you need to download 5 years of monthly share prices data for the 20 stocks from the FTSE 100 using Yahoo Finance. Step 2- in your report Explain the reason for your choice of stocks {not indices) using the key variables available about the stocks such market cap, PE Ratio or beta. Do not leave it to reader to guess that why you have selected these stocks. Step 3- Calculate Risk (standard deviations) and return (simple returns 0R log returns) of these individual stocks and present your answers neatly in the report. Step 4: Write a non-technical analysis of these stocks for your prospective investors with differing risk preferences. The analysis should answer the questions that why an investor may invest in a stock or why a stock is not ideal for them. Step 5- Construct Portfolio by combining the stock you categorised as low risk and high risk. The criteria. Assume that each portfolio is equally weighted. Step 6- Calculate Portfolio risk & return- You need to use mean-variance analysis approach based on historical prices and return. Whereas, for return calculation you can use simple return or log return method, either is ne. Step 7 Analyse & Compare the portfolios and remember the possibility of investing in a risk-free investment as well