Portfolio Theory Case (Professor David Moreno)

PARTNERS HEALTHCARE CASE
The goal of this case is to teach to students the relevance of non traditional assets (as real states or commodities) in a well-diversified portfolio. Moreover, students will be able to practice with the most important concepts from portfolio theory as efficient frontier, dominated portfolios, Sharpe ratio, among others. In addition, students are learning how portfolio theory can be useful not only for portfolio managers but for any company or firm with some funds to manage.

To do this case students must work in groups and, at the end, each group must give a printed copy of the answers to all these questions. Moreover, they should prepare a presentation in Power Point or Word answering these questions for their presentation on the classroom.

Short Questions (You should answer these questions very shortly)

1. How do the hospitals obtain their profits? Why do the hospitals use or need the Long-Term Funds? Compute the annual returns obtained by the LTP between 1995 and 2004 and represent them on a graph. In addition, what has the average return been during that time period? 2. According to the text the physician organizations or hospitals can invest their financial resources in several centrally-managed pools. What are these pools? How are they?

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Portfolio Theory Case (Professor David Moreno)

3. The problem presented in the case is a typical problem of portfolio theory. Is it a security selection problem or an asset allocation problem? Explain the differences among them. 4. During the last years the Parthners Investment Comitte have introduced a new asset class, REITs and Commodity Index. Explain these non traditional assets and if in your own opinion they should be interesting or not.

Long Questions (in this case you will be considered a portfolio manager trying to explain or to answer to