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Financial Modeling - Essay Example
Finance & Accounting
Pages 3 (753 words)
Financial Modelling <Insert Name> <Insert Grade Course> <Insert Insert Date Financial Modelling Introduction Portfolio management is both an art and a science that involves; making decisions about the best investment mix and policies, allocating assets for institutions and individuals, balancing existent risks against performance, and matching investments to organizational objectives (Drake & Fabozzi 2010)…
It has been argued that this economic turmoil has rendered portfolio management theories irrelevant. This paper explores this assertion. Recent Upheavals in World Financial Markets The global financial crisis of the 21st century has been described as the greatest economic and financial crisis the world has seen since the Great Depression of the 1930s (Ciro 2012). This economic turmoil, unlike the 1930s depression, caught many by surprise. Governments, investors, and the knowledgeable and sophisticated market participants were caught unawares by the speed and intensity of the economic decline. The international credit and financial markets were disrupted and dislocated by this financial crisis especially in 2008 and 2009. Governments in response to this economic crisis came up with policy and fallout responses from 2009 and 2011. These responses to some extent have rendered portfolio management theories irrelevant. Why Portfolio Management Theories Have Become Irrelevant Portfolio management theories are two; portfolio theory and capital market theory. ...
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