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Learn how to structure and create an optimization model and efficient frontier for a portfolio.
The concept of the frontier forms the basis of portfolio theory, which pertains to how investors seek to build a portfolio that maximizes expected returns while managing a certain level of risk. It aids investors in comprehending the risks and rewards within their portfolios, assessing how they stack up against the most efficient array of portfolios. In the finance field, you're likely to come across discussions on the efficient frontier in finance research papers or on financial news channels like Bloomberg or CNBC. Are you interested in discovering how to create a frontier from scratch and understanding its advantages and limitations? Would you like to delve into the fundamentals of portfolio management? If so, this project is perfect for you.
Get to know the Project Leader and other students, ask questions about the project requirements, prepare your workspace.
Gain an understanding of business statistics terms and concepts. Why is business statistics important in finance? How do portfolio managers utilize business statistics?
Three decades ago, Eugene Fama and Kenneth French introduced their three-factor model. What are the three factors? How do you use this model to evaluate managers investment returns? We will learn how to model out the three factors in MS Excel.
Students will learn how to utilize the Solver tool in MS Excel to optimize portfolios and construct the efficient frontier graph.
In the second part, students will use the efficient frontier graph in Part 1, chart the capital market line, and find the tangent portfolio to the efficient frontier.
How are fund managers’ performances evaluated? You will learn about different performance metrics that managers typically use.
Fixed income often has a part in a fund investment portfolio. You will learn about how an endowment manages their liability by using MS Excel to construct an asset-liability model.
Polish your project deliverables and present them to the Project Leader and other students in the final group session.
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Minh Le is a Finance Fellow at Open Avenues Foundation, where he works with students leading projects in Finance and Asset Management.
Minh Le is a Managing Director at North Capital Private Securities where he works on different aspects in the private securities industry, including research, due diligence, secondary trading, and custodial services. Minh Le has seven years of experience working in the private securities space.
Prior to working at North Capital, Minh was a Venture Capital Associate at University Growth Fund, a student-run venture fund based in Salt Lake City, Utah, and an Investment Intern at Deseret Management Corporation, a Utah insurance company.
He holds a degree in Finance.
A fun fact about Minh: he enjoys running and cooking Vietnamese foods.