...LEVEL III Question: Topic: Minutes: 1 Individual PM (IPS and Human Capital) 27 Reading References: Level III, Volume 2, Study Session 4, Reading 10 “Managing Individual Investor Portfolios,” Ch. 2, James W. Bronson, CFA, Matthew H. Scanlan, CFA, and Jan R. Squires, CFA, Managing Investment Portfolios: A Dynamic Process, Third Edition (CFA Institute, 2007). Level III, Volume 2, Study Session 4, Reading 14 “Lifetime Financial Advice: Human Capital, Asset Allocation, and Insurance,” Roger G. Ibbotson, Moshe A. Milevsky, Peng Chen, CFA, Kevin X. Zhu (The Research Foundation of CFA Institute, 2007). LOS: 2012-III-2-10-a, j, k, l “Managing Individual Investor Portfolios” The candidate should be able to: a) discuss how source of wealth, measure of wealth, and stage of life affect an individual investor’s risk tolerance; b) explain the role of situational and psychological profiling in understanding an individual investor; c) compare the traditional finance and behavioral finance models of investor decision making; d) explain the influence of investor psychology on risk tolerance and investment choices; e) explain the use of a personality typing questionnaire for identifying an investor’s personality type; f) compare risk attitudes and decision-making styles among distinct investor personality types, including cautious, methodical, spontaneous, and individualistic investors; g) explain the potential benefits, for both clients and investment advisers, of having a formal investment policy...
Words: 9813 - Pages: 40
...MODERN PORTFOLIO THEORY A N D INVESTMENT ANALYSIS EIGHTH EDITION INTERNATIONAL STUDENT VERSION EDWIN J. ELTON Leonard N. Stern School of Business New York University MARTIN J. GRUBER Leonard N. Stern School of Business New York University STEPHEN J. BROWN Leonard N. Stern School of Business New York University WILLIAM N. GOETZMANN Yale University WILEY John Wiley & Sons, Inc. Contents About the Authors Preface Part 1 Chapter 1 ix vii INTRODUCTION INTRODUCTION Outline of the Book 2 The Economic Theory of Choice: An Illustration Under Certainty Conclusion 8 Multiple Assets and Risk 8 Questions and Problems 9 Bibliography 10 4 1 2 Chapter 2 FINANCIAL MARKETS Trading Mechanics 11 Margin 14 Markets 18 Trade Types and Costs 25 Conclusion 27 Bibliography 27 1 1 Chapter 3 FINANCIAL SECURITIES Types of Marketable Financial Securities 2 8 The Return Characteristics of Alternative Security Types Stock Market Indexes 3 8 Bond Market Indexes 3 9 Conclusion 4 0 36 28 Part 2 Section I Chapter 4 P O R T F O L I O ANALYSIS MEAN VARIANCE PORTFOLIO THEORY THE CHARACTERISTICS OF THE OPPORTUNITY SET UNDER RISK Determining the Average Outcome 4 5 A Measure of Dispersion 4 6 Variance of Combinations of Assets 4 9 Characteristics of Portfolios in General 51 Two Concluding Examples 61 Conclusion 6 4 XIII 41 43 44 XIV CONTENTS Questions and Problems Bibliography 6 6 Chapter 5 64 DELINEATING EFFICIENT PORTFOLIOS Combinations...
Words: 1893 - Pages: 8
...Strategy Process 10 Organizational Structure and Control Prof. Dr. Bernd Venohr Berlin, June 2007 © 2007 Prof. Dr. Bernd Venohr Agenda Introduction to Strategy 1 2 3 4 5 6 7 8 9 Course Overview and Strategy Concept Economics of Strategy Shareholder Value External Environment Internal Environment Competitive Positioning Diversification Mergers & Acquisitions Global Strategy Business Strategy Corporate Strategy Strategy Process 10 Organizational Structure and Control 11 Strategic Leadership © 2007 Prof. Dr. Bernd Venohr 2 Overview “Structure follows strategy“ Basics of structuring organizations Example: managing the multibusiness organization © 2007 Prof. Dr. Bernd Venohr 3 Alfred Chandler: Structure follows strategy Alfred Chandler (business history professor at Harvard Business School) examined in Strategy and Structure: Chapters in the History of the Industrial Enterprise (1962) the organizational changes of several large US companies: Organization developed in response to changes in the corporation's business strategy An organization begins with a single product or line of business. Over time the organization begins to grow in size and complexity (more products ). Ultimately the structure of the organization has to change from functional to divisional organization as a result of the strategy change: „unless structure follows strategy, inefficiency results“ This research has been a source of controversial discussion...
Words: 3349 - Pages: 14
...(Difficulty: E = Easy, M = Medium, and T = Tough) True-False Easy: (2.2) Payoff matrix Answer: a Diff: E [i]. If we develop a weighted average of the possible return outcomes, multiplying each outcome or "state" by its respective probability of occurrence for a particular stock, we can construct a payoff matrix of expected returns. a. True b. False (2.2) Standard deviation Answer: a Diff: E [ii]. The tighter the probability distribution of expected future returns, the smaller the risk of a given investment as measured by the standard deviation. a. True b. False (2.2) Coefficient of variation Answer: a Diff: E [iii]. The coefficient of variation, calculated as the standard deviation divided by the expected return, is a standardized measure of the risk per unit of expected return. a. True b. False (2.2) Risk comparisons Answer: a Diff: E [iv]. The coefficient of variation is a better measure of risk than the standard deviation if the expected returns of the securities being compared differ significantly. a. True b. False (2.3) Risk and expected return Answer: a Diff: E [v]. Companies should deliberately increase their risk relative to the market only if the actions that increase the risk also increase the expected rate of return on the firm's assets by enough to completely compensate for the higher risk. a. True b. False (2.2) Risk aversion Answer: a Diff: E [vi]. When...
Words: 13492 - Pages: 54
...Project Portfolio Management Project Portfolio Management is a methodology to manage a company’s projects in a similar way that financial manager manages the company’s cash flow and related finances. According to Rouse (2013), “PPM (project and portfolio management) is a strategic prioritization methodology employed to analyze and manage current or proposed projects within an organization”. The purpose is to determine the best available sequence and group of projects to achieve organizational strategic objectives from concept to conclusion. Project Portfolio Management aims to align the projects, investments and resources with organizational priorities. Project Portfolio Management is a continuous process which comprises of project data collection, evaluation of each project, optimizing the performance of projects in portfolio and resources of company and execution of portfolio work. Companies have deployed project portfolio management solutions for establishing efficient processes to advantage of their IT infrastructure for achieving organizational objectives. Perry and Hatcher (2003) identified four categories as Ad hoc, structured, standardized and optimized on the basis of maturation level of IT. According to them, majority of organization had adopted Project Portfolio Management on ad hoc basis rather than a continuous process. Ad hoc is the level when use of IT, other resources and project priorities are not aligned with organizational objectives. In this stage, the organization...
Words: 2594 - Pages: 11
...Journal of Marketing Management Vol. 26, Nos. 1–2, February 2010, 74–89 From an aggregate to a brand network: a study of the ´ brand portfolio at L’Oreal Claude Chailan, International University of Monaco, Monaco Abstract Our purpose is to contribute to the understanding of brand-portfolio management by examining the brand-portfolio strategies of a world-leading company. We started to work on a case study with L’Oreal. Our research ´ focused on two questions: (1) what reasons lead L’Oreal to develop a brand´ portfolio strategy?; (2) how can brand-portfolio management create a higher and stronger level of competitive advantage for this company? The results show that an aggregation of brands is not in itself a brand portfolio. The juxtaposition of brands is one of, but not the sole, element necessary for the development of a brand portfolio, which is a combination of a brand ensemble and key competences born out of organisational savoir-faire. By analysing the evolution of the L’Oreal brand portfolio, this work shows how the brand ´ combination within a portfolio is a key factor for company development, growth, and risk management. It is a crucial phase to understand L’Oreal’s competitive ´ advantage. Keywords brand portfolio; brands; strategic marketing; L’Oreal ´ Introduction Many firms are becoming increasingly concerned with the definition of the relationships between brands within the company as parts of a whole, and with the organisation of these connections within...
Words: 7994 - Pages: 32
...Return on Investment Analysis for E-business Projects Mark Jeffery, Northwestern University Introduction The Information Paradox Review of Basic Finance The Time Value of Money ROI, Internal Rate of Return (IRR), and Payback Period Calculating ROI for an E-business Project Base Case Incorporating the E-business Project Incremental Cash Flows and IRR Uncertainty, Risk, and ROI Uncertainty Sensitivity Analysis 1 2 4 4 6 6 7 8 10 11 11 11 Project and Technology Risks Monte Carlo Analysis Applied to ROI Executive Insights The Important Questions to Ask When Reviewing an ROI Analysis A Framework for Synchronizing e-Business Investments With Corporate Strategy Beyond ROI: Trends for the Future Acknowledgments Glossary Cross References References 12 13 14 14 14 16 17 17 17 17 INTRODUCTION As the late 1990s came to a close, many companies had invested heavily in Internet, e-business, and information technology. As the technology bubble burst in 2000 many executives were asking “Where is the return on investment?” When capital to invest is scarce new e-business and information technology (IT) projects must show a good return on investment (ROI) in order to be funded. This chapter will give the reader the key concepts necessary to understand and calculate ROI for e-business and IT projects. In addition, the limitations of calculating ROI, best practices for incorporating uncertainty and risk into ROI analysis, and the role ROI plays in synchronizing IT investments with corporate strategy...
Words: 15434 - Pages: 62
...Portfolio Strategy Assignment Demetrie M. Howard University of Phoenix Introduction The organization I have chosen to plan a portfolio strategy for is O’Connor and Associates. This organization is my current employer and it will be a challenge to create one for them. The organization is a property tax firm, it assist clients with reducing the appraised value of their property, which in turn reduces the amount of property taxes due. The organization is diversifying; it is going into third party collections, judgment recovery, and mortgage loans. This firm has made substantial errors in the past therefore to understand the cause and effect of those errors we will attempt to model their market and business behaviour. This model is an effort to estimate the expected results of alternative strategies and processes. Consumer expectations and other variables as well as technology, the internet, telecommunications and globalization have accelerated the pace of change, and shortened product lifecycles has contributed to this strategic plan. Technology has augmented the capability to amass information and respond to change immediately and analytically. It is also important for corporations to achieve and maintain their competitive advantages. Cash Infusion The cash infusion allocated to enhance the company and to manage is $40 million dollars. Following is the description of portfolio strategy and a portfolio of assets in relation to the investment of $40 million...
Words: 1588 - Pages: 7
...Selling Concept 4. Marketing Concept 5. Societal Marketing Concept c. Preparing an Integrated Marketing Plan and Program xi. Marketing Mix xii. Integrated Marketing Program d. Building Customer Relationship xiii. Customer Relationship Management xiv. Relationship Building Blocks 6. Customer Value 7. Customer Satisfaction xv. Partner Relationship Management e. Capturing Value from Customers xvi. Customer Loyalty xvii. Share of Customers xviii. Customer Equity 3. The changing Marketing Landscape CHAPTER II : Company and Marketing Strategy Partnering to Build Customer Relationships 8. Strategic Planning 9. Steps in Strategic Planning a. Defining the company mission b. Setting company objectives and goal c. Designing the business portfolio i. Business Portfolio ii. Portfolio Analysis iii. Strategic Business Units (SBUs) iv. Boston Consulting Group (BCG) Matrix 1. Star 2. Cash Cow...
Words: 671 - Pages: 3
...Management Control of Project Portfolio Uncertainty: A Managerial Role Perspective Tuomas Korhonen, Cost Management Center (CMC), Department of Industrial Management, Tampere University of Technology, Tampere, Finland Teemu Laine, Cost Management Center (CMC), Department of Industrial Management, Tampere University of Technology, Tampere, Finland Miia Martinsuo, Department of Industrial Management, Tampere University of Technology, Tampere, Finland PAPERS ABSTRACT ■ This article presents empirical results on different managers’ viewpoints regarding the sources and management of project portfolio uncertainty. As a key result, this study demonstrates the versatility of uncertainties experienced by managers, the limited degree of perceived control over them, the use of an almost complete management control package in managing uncertainties, and the necessity of managers’ cooperation in the skilled use of the management control package when managing uncertainties. In addition, a further research agenda is proposed. KEYWORDS: project portfolio management; uncertainty; managerial roles; management control systems; product development INTRODUCTION ■ n their product development, large companies have adopted project portfolio management (PPM) as a means for prioritizing and selecting product development projects among various options as well as allocating resources with the value maximization, balance, and strategic alignment of the portfolio in mind (Cooper, Edgett, & Kleinschmidt...
Words: 11185 - Pages: 45
...Performance evaluation methods in commercial banks and associated risks for managing assets and liabilities 97 Performance evaluation methods in commercial banks and associated risks for managing assets and liabilities University Reader PhD. Claudiu CICEA, Academy of Economic Studies Bucharest, Romania email : claudiu.cicea@man.ase.ro University Professor PhD. Daniela HINCU, Academy of Economic Studies Bucharest, Romania email : daniela.hincu@man.ase.ro Abstract Commercial banks represent the core of the credit for any national economy. In turn, the credit is the engine that put in motion the financial flows that determine growth and economic development of a nation. As a result, any efficiency in the activities of commercial banks has special implications on the entire economy. That is why we consider very useful to present an analysis of possibilities for evaluating the performance in the commercial banks. The management of every commercial bank must establish a system for assessing investment performance which suits its circumstances and needs and this evaluation must be done at consecutive intervals to ensure the achievement of the Bank's investment objectives of hand; and to know the general direction of the behavior of investment activity in the past and therefore predictable as it in the future on the other hand. The main objective for this paper is to analyze some quantitative methods used in assessing the performance of investment activity in commercial banks (such...
Words: 3780 - Pages: 16
...Australia Email: ranzcr@ranzcr.edu.au Website: www.ranzcr.edu.au Telephone: + 61 2 9268 9777 Facsimile: + 61 2 9268 9799 2 CONTENTS 1. INTRODUCTION……………………………………………………………….3 2. WHAT IS A TRAINING NEEDS ANALYSIS? ………………………...……4 3. BENEFITS OF UNDERTAKING A TNA……………………………………..6 4. INITIAL QUESTIONS ………………………………………………………..6 5. METHODOLOGY………………………………………………………………8 6. TRAINING NEEDS IDENTIFIED……………………………………………11 7. RECOMMENDATIONS………………………………………………………18 8. CONCLUSION………………………………………………………………...22 9. REFERENCES………………………………………………………………..24 10. BIBLOGRAPHY……………………………………………………………….26 11. APPENDIX 1…………………………………………………………………..27 12. APPENDIX 2…………………………………………………………………..28 13. APPENDIX 3…………………………………………………………………..36 Education and Research Portfolio Training Needs Analysis 22 July 2011 Page 2 1) INTRODUCTION This training needs analysis (TNA) has been conducted to ascertain the training needs and priorities of members of the Royal Australian and New Zealand College of Radiologists (“the College’). Findings from the TNA will assist in shaping the Learning and Development Framework, which, in turn, will influence the future direction of training and education at the College. The Learning and Development...
Words: 9059 - Pages: 37
...2009 Kale and Singh 45 A R T I C L E Managing Strategic Alliances: What Do We Know Now, and Where Do We Go From Here? by Prashant Kale and Harbir Singh Executive Overview Alliances present a paradox for firms. On the one hand, firms engage in a large number of alliances to secure and extend their competitive advantage and growth; on the other hand, their alliances exhibit surprisingly low success rates. In this paper, we discuss how firms can address these failures by identifying some of the primary drivers of alliance success. First, we discuss how firms can achieve success with any individual alliance by considering critical factors at each phase of the alliance life cycle. Second, we show how firms can increase their overall alliance success by developing and institutionalizing firm-level capabilities to manage alliances. Third, we highlight emerging issues in the alliance context, including the need to recognize a new class of alliances between firms and not-for-profit organizations or individuals, the benefits of taking a “portfolio approach” to alliance strategy and management, and the opportunity to transfer one’s alliance capabilities to the effective management of other interfirm relationships, including acquisitions. I The Alliance Paradox n the last two decades, alliances have become a central part of most companies’ competitive and growth strategies. Alliances help firms strengthen their competitive position by enhancing market...
Words: 11145 - Pages: 45
...Valuation, and Managing Investment Portfolios: A Dynamic Process. Ackerman, Carl, Richard McEnally, and David Ravenscraft. 1999. “The Performance of Hedge Funds: Risk, Return, and Incentives.” Journal of Finance. Vol. 54, No. 3: 833–874. ACLI Survey. 2003. The American Council of Life Insurers. Agarwal, Vikas and Narayan Naik. 2000. “Performance Evaluation of Hedge Funds with OptionBased and Buy-and-Hold Strategies.” Working Paper, London Business School. Ali, Paul Usman and Martin Gold. 2002. “An Appraisal of Socially Responsible Investments and Implications for Trustees and Other Investment Fiduciaries.” Working Paper, University of Melbourne. Almgren, Robert and Neil Chriss. 2000/2001. “Optimal Execution of Portfolio Transactions.” Journal of Risk. Vol. 3: 5–39. Altman, Edward I. 1968. “Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy.” Journal of Finance. Vol. 23: 589–699. Altman, Edward I. and Vellore M. Kishore. 1996. “Almost Everything You Wanted to Know about Recoveries on Defaulted Bonds.” Financial Analysts Journal. Vol. 52, No. 6: 57−63. Altman, Edward I., R. Haldeman, and P. Narayanan. 1977. “Zeta Analysis: A New Model to Identify Bankruptcy Risk of Corporations.” Journal of Banking and Finance. Vol. 1: 29−54. Ambachtsheer, Keith, Ronald Capelle, and Tom Scheibelhut. 1998. “Improving Pension Fund Performance.” Financial Analysts Journal. Vol. 54, No. 6: 15–21. Ambachtsheer, Keith. 1986. Pension Funds and the Bottom Line: Managing the Corporate...
Words: 12603 - Pages: 51
...1.0 INTRODUCTION Ekomate System was founded in 1996 by Tom Thomas after completing his Msc in Computer Engineering from the University of Texas USA. The company starts of as a local business for two years before they start to internationalize. The first country they did business is USA due to connections Tom has during his time in the US. Ekomate has established a 100% Export Oriented Division for IT development, in conjunction with Software Technology Parks of India in 2000. Currently Ekomate continues its efforts to expand the business both in the international and domestic markets in spite of the global slowdown in IT business. In 2005, Ekomate is awarded ISO1901:2000 Quality Certification from BVQI. Total company focus is now in the UK, Europe and USA Markets. 2.0 ISSUES The issues of Ekomate System network relationships starts off with communication. The company is based in Bangalore, and Thomas planned to expand the business internationally particularly to the North American and European market, therefore creating various issues. Lack of Network Relationship The lack of network relations with other business and potential clients are the core of Ekomate’s issues. Without network relationships, it is proven difficult to expand business especially to a global market. Communication Barriers The lack of network relationship is a direct consequence of communication barrier in which Ekomate are unable to communicate to clients directly without any sort of established...
Words: 1700 - Pages: 7
