Discuss the underlying portfolio theory, determine the efficient frontier, optimal risky portfolio and capital market line.

Assessment Information This assignment is designed to assess learning outcomes: 1. Apply fundamental analysis to determine the advantages of diversification. 2. Work out an optimal portfolio 3. Evaluate the performance of a portfolio. This assignment is an individual assignment. This assignment requires you to write a report dealing with the following task You are required to build your own portfolio using at least six shares identified from FTSE250 constituents. You are required to use monthly data over the last five years(for example from January 2017 to December 2021) using databases such as Quandl.com, Bloomberg, Yahoo Finance or Google Finance to create your portfolio (indicate the database you are using). There is a list of companies attached. Make sure you have at least 60 observations of Discrete or Logarithmic returns for every selected company. The list of potential assets is provided in a separate spreadsheet. Assignment Brief Page 2 of 4 1) Outline in the report the choice of companies you have made in creating these portfolios – provide an explanation and/or justification about why you have chosen the five or more companies for your portfolio construction. 2) Discuss the underlying portfolio theory, determine the efficient frontier, optimal risky portfolio and capital market line. Draw the efficient frontier and the capital allocation line. For the risk-free rate, you can use an average measure of the UK short-term Bond Yield over the same period corresponding with your sample. The data on bond yield is available in https://uk.investing.com/rates-bonds/uk-2-year-bond-yield-historical-data  You are required to submit both your Word report and Excel calculations.  We will only mark your report, but the submission of both files is mandatory. 3) In relation to the concept and theory of portfolio diversification, calculate the relevant performance evaluation measures and interpret your findings. Provide recommendations based on the academic literature about effective strategies to use for the enhancement of risk-return performance of your portfolio. Criteria for Assessment The marking criteria are indicative to the elements that one might wish to address in your report. 1. Selection of assets & portfolio allocation must be clearly stated. (10%) 2. Modern portfolio theory and relevant concepts should be applied, discussed and explained. (15%) 3. Stocks and portfolio statistics. Calculations and formula. (30%) 4. Interpretation of findings and recommendations. (35%) 5. Conclusion, Presentation and Reference. (10%) Marks will be given for clear explanations of each step and element of your decisions in your report. Justification for each assumption and decision is encouraged. The calculations, code orspreadsheet could be appended to the back of the document. This does not count in the word count. You should look to demonstrate your understanding of the concept of portfolio construction, risk and associated concepts along with the limitations of such an approach.