Question
BSM002: Finance Theory This coursework should be presented in the form of a Management Report which is divided into sections as follows: Title/Front Page (Students
BSM002: Finance Theory This coursework should be presented in the form of a Management Report which is divided into sections as follows: Title/Front Page (Students Name and Matriculation Number, Course, Name of the Module, Word Count), Contents Table, Executive Summary, Bibliography and References, Appendices. Coursework should be between 2500-3000 words in length (excluding appendices) and in typed format. This is an individual assignment and no part of this work should be shared with any other students. Coursework tasks: 1. Critically evaluate the main contributions of Portfolio Theory in the understanding of risk and return characteristics of financial assets. Select any two stocks from the UK market that you consider have low correlation in between them. Download monthly data on these stocks for the last five years and based on that, show the minimum risk portfolio of these stocks (at least 20% in each stock), maximum return portfolio, optimal (risk adjusted) portfolio, and capital market line. Compare the performance of optimal portfolio with the market portfolio. (40% of the total marks) 2. Critically appraise the importance of the signals coming from the movements in the Yield Curve of a country. Compare the current yield curve to the shape of the yield curve a month ago, and identify the signals in terms of future economic activity, interest rates and inflation rates. (40% of the total marks) 3. Critically review the performance of the UK stock market (in the last six months) in the context of the criticism of the Efficient Financial Markets Hypothesis. (20% of the total marks)
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