Risk Assessment and Return Memo

Risk Assessment and Return Memo Essay example
Finance & Accounting
Pages 5 (1255 words)
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To: Rainier Ekstrom, Chief Executive Officer (CEO) From: Subject: Selecting The Portfolio And Investment Strategy Diversification of portfolio is important in order to achieve maximize the return and minimize the risk of the portfolio (Froot, Scharfstein, & Stein, 1993).


To create a portfolio, I have selected four stocks of different companies belonging from different companies after analyzing different companies. The investment strategy previously adapted by Casta Bonita Ceramics has been to achieve the highest possible returns. But this strategy of achieving the maximizing returns has a drawback as the management does not consider risk as an important element while investing in different investment opportunities or assets. Therefore the strategy has been changed and Casta Bonita Ceramics would not only analyze the returns of the stock but the risk of the investment as well. I have also followed a similar strategy by identifying the risks as well as the return of the stocks and I have tried to make sure that the portfolio achieves the maximum returns with minimum risk. I have examined different companies and one of the companies that I have considered is the Infoway Computers for investment purpose. By analyzing the company, the return and the fluctuations of the returns are identified and it has been found that the company offers high returns to its shareholders however the risk of the company is also high. Infoway Computers belong to the Information Technology and Telecommunications Industry, however I would still suggest keeping the stocks of Infoway Computers in the portfolio as the company is a large organization and it has been operating for years. ...
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