Introduction of Portfolio of Investment

           The portfolio is consist of several kinds of investment products relating to the common stock, mutual funds, treasury bonds, and bonds. The total initial investment budget set out for the purchase of all these investment products was limited to $50000. Through effectively conducting research and utilizing the investment budget portfolio is enriched with important investment products. All the investment products cost almost 95% of the initial investment budget.

          Investment products are selected and purchased on the basis of expected returns somehow still risk factor exists in the portfolio. According to the plan, limited investment risk was the prime investment strategy. Considering this strategy only low risk investment products are selected for investment. Somehow, in some cases, such investment products are also purchased that has relatively higher beta along with high return on investment.

          Evaluation of investment alternatives available to individual investors and professional investors indicate that individual investor has relatively less available alternatives as compared to professional because of limited access to the pools of information. Furthermore, lack of experience is also a contributing factor for individual investor’s limitations. Alternative investments available to professional and individual investors are private equity, real estate investment trusts, commodities, venture capital, and hedge funds. In terms of return and risk factors, the best available alternative investment is a venture and hedge funds. Commodities linked with agriculture are highly risky investment alternatives as changes in the weather condition can destroy the crops which sometimes result in the negative influence on the overall return of investment.           Summary of Investment Securities and Techniques

In the various investment securities, different investment techniques were utilized to ensure a high return on investment. The stock was purchased from 5 different companies working in a different sector. The technique used in buying stock was to focus on diversification of the stock portfolio to decrease risk factor. Diversification can reduce the risk factor for investment and increases the chances of a moderate to high return on investment. Although, the standard deviation was used to measure risk factor for the investment products before investing in the particular stock option.

Additionally, drift calculation and appropriate use of call and put options worked as effective techniques in the selection of right kind of stock for investment. While purchasing investment securities market beta and security beta both were taken into consideration. Although, risk-free rate of return was considered while making a selection about the purchase of securities (Nicholson, 2011).

According to the analysis and study of the market, a number of factors from the investment market can influence the return on investment. Firstly, political factors and legal factors can influence investment return through changes in the policies and strategies. For instance, increase in the interest rate on loan and bonds can cause issues for the return on stock investment as potential investors will switch to these investment products to earn more interest related benefit on their investment. Switching of investors to alternative products will result in a decrease in share prices in the market. The economic concept of demand and supply equilibrium is evidence of this fact.

Excluding legal and political factors, other important factors are fluctuation currency value. Time value of money is also influencing investment return. In general, some social factors can also draw an impact on the investment market. For instance, changes in the trend of investment or introduction of a new innovative product can also draw an impact on the investment market. In the past, the introduction of bit coin and cryptocurrency has influenced other investment products. All these can be also considered as subjective risk factors which are hard to calculate but historical analysis and experiences can support in preventing such risk factors (Goodman, Neamtiu, Shroff, & White, 2014).

Corporate bonds were purchased from three companies known as HNA Group Co, Degrees International Ltd., and China South City Holding Ltd.  Somehow, fidelity investment related funds families are nationwide funds family, Victory funds family, USAA funds family, and American funds family. In the investment portfolio, stock and shares are purchased from 5 different companies which include Nike Inc., Occidental Petroleum Corporation, Starbucks, Target Corporation, and Abbott laboratories. Nike is working in the International market with its sports and clothing-related products. Abbott laboratories as a healthcare organization are working with a wide range of products related to psychological treatments and physical. Starbucks is famous for its food and beverages related products.

Occidental Petroleum Corporation works in the oil and petroleum industry and supplies its products all over the world. Target Corporation business is connected with the retail industry. Financial analysis of the companies is taken through calculating the ratio and changes in the financial position of the companies over the selected period of time. Profit margin calculated for the common stock companies is as Nike 5%, Occidental 23%, Target Corporation 4%, and Starbuck 18%. Furthermore, analysis of liquidity condition in the selected companies indicates that most of the companies selected for investment have strong liquidity position under which meeting with short term obligations is not a big deal (LARKIN, 2019). Although, some companies have poor liquidity condition which may increase financial risk. Occidental, Target, and Starbucks are companies which as poor liquidity condition as the current ratio is below 1.        

Annualized Return on Portfolio of Investment

Annualized return on the portfolio is calculated through subtracting the initial portfolio value from the ending portfolio value and dividing this answer by initial portfolio value. According to the calculation annualized return on the portfolio is 52% if days held are 30 but 4.28% in the case of 300 days held. The initial portfolio value is equal to the 37663.35. While on the other hand, the ending value of the portfolio is 38984.02. The initial and ending values of the portfolio are cumulative values of return encompasses the total return on the stock, the total return on bonds, and the total return on treasury notes (knowledgegrab.com, 2018).

Capital Asset Pricing Model (CAPM) of Portfolio of Investment

In Capital Asset Pricing Model (CAPM) values of expected return, Risk free rate, and expected return of market are calculated and recorded as 10%, 3%, and 8% respectively. Somehow, the market risk premium was calculated through subtraction between risk free rate, and the expected return of the market. The calculated market risk premium is 5%. While the beta is 1.3. Calculated CAPM return on equity is 9.5%. Comparative analysis of return on equity and CAPM return on equity indicates that CAPM return on equity is greater than the value of return on equity calculated through the use of ROE ratio formula. The total calculated difference is 8.46%.        

Risk of Portfolio of Portfolio of Investment

        There are some risk factors associated with the investment portfolio which are required to be taken into control to ensure a high return on investment. The risk factors are specifically linked with the common stock investment products as the fluctuating market price of the stock can cause to decrease yield and overall share prices in the market. Considering this risk factor the best mitigation strategy is to increase the total number of companies and reduce stock purchased in each one. In other words, more focus on diversification strategy implementation is required.  

Performance and Return of Portfolio of Investment

        Overall analysis indicates that the portfolio has enough strength to provide yield and high return on investment with minimum influence of risk factor. The return on the portfolio can be enhanced through utilizing call and put options on the right moment. Share price fluctuates on a daily basis, therefore, investors should invest in shares when prices do down and sell out the shares when prices go towards increase and get stability.

Conclusion on Portfolio of Investment

The lessons learned from the investment are that investors need to consider the limitation of experiences and knowledge about the investment market and investment process. Investors just need to get support from available open to access internet sources and academic literature. Excluding all these, the key factor and information that should be taken into mind while purchasing bonds can be identified as coupon rate and maturity date. Furthermore, the comparison should be also made between callability of bonds and sinking funds to support investors to have secured coupon rate. In case a had more time to manage portfolio then additional changes that I would make are selecting investment product through using the time value of money analysis.