Create a Portfolio
Hello everyone, who can assist me to making this portfolio? This portfolio regarding international finance subject it has 70% of passing marks so I need help from a person who can make a better portfolio the following questions are as under:
ASSESSMENT TASKS
You are a fund manager of an investment bank in the UK. You are planning to construct a portfolio using the following currencies: USD/GBP, EUR/GBP and AUD/GBP. You wish to examine and critically evaluate the performance of these currencies for the past three year. For this purpose, you are required to conduct some analyses and write a 3000-word report.
PART A (40%)
1. Use Bloomberg or Bank of England and any other websites that offer historical spot foreign exchange data to extract the daily closing currency values for the most recent three year (e.g. 31 January 2017 to 31 January 2020).
2. Calculate the following:
(a) The daily rate of returns for each of the currencies. Visually examine the performance of the value of the currency and the daily rate of returns for each of the currencies by showing the data on graphs or charts as appropriate.
(b) The mean returns for each of the currencies.
(c) The variance and standard deviation of returns for each of the currencies.
(d) The covariance of returns between each pair of the currencies.
(e) The correlation coefficients of returns between each pair of the currencies.
3. Based on your results from (a) to (e) and any further analysis you may wish to do, compare and comment the risk and return patterns and characteristics for each of the currencies. Your comments should draw on materials and theories you have learnt in this module. Relate the performance of the currencies to relevant events (e.g. economic, financial or political events) that took place during this period and discuss how they had influenced the performance for each of the currencies. You must give bibliographic references to the sources of your information.
PART B (40%)
This section requires you to construct an equally weighted portfolio of the currencies selected above.
1. Calculate the following:
(a) The daily rate of returns of the portfolio. Visually examine the performance of the returns for the portfolio and each of the currencies by showing the data on graphs or charts as appropriate.
(b) The mean, variance and the standard deviation of the portfolio returns.
(c) The covariance and correlation coefficients of returns between each currency and the portfolio.
(d) The coefficient of variation of returns for each currency and the portfolio.
2. Based on your results from (a) to (d), examine and compare the performance of your equally weighted portfolio returns with those of the individual currencies. Comment on your observations, relating to the portfolio theory, and discuss the benefits of diversification across these currencies. You may also apply the portfolio evaluation techniques to evaluate critically the performance of your portfolio with those of the individual currencies.
PART C (20%)
This section requires you to draw a conclusion of the portfolio construction and analysis above.
From the viewpoint of a fund manager who wishes to determine whether the currencies that you examined are worth investing in, how useful is the portfolio analysis that you carried out? What limitations do you see in your analysis and results? What further analysis would you wish to carry out?
