MPT

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MPT

  1. 1. Harry Markowitz Merton Miller William Sharp
  2. 2. Modern Portfolio Theory (MPT) Gangming Liang (Leon) (555970) Academic Communication Skills Suzy Bausch Spring 2010
  3. 3. Preview <ul><li>Definition and Usage of MPT </li></ul><ul><li>History and Key Directions of MPT </li></ul><ul><li>Efficient Frontier of MPT </li></ul><ul><li>Real Examples of MPT </li></ul><ul><li>Summary </li></ul><ul><li>Thoughtful Ending </li></ul>
  4. 4. Definition and Usage of MPT <ul><li>Definition: </li></ul><ul><li>Approach for Stockholders </li></ul><ul><li>Investment Decision (Return & Risk) </li></ul><ul><li>Usage: </li></ul><ul><li>Highest Possible Return </li></ul><ul><li>Lowest Possible Risk </li></ul><ul><li>Finance in Academic & Business </li></ul><ul><li>Different Strategies </li></ul>Source: The New York Times
  5. 5. History and Key Directions of MPT <ul><li>History: </li></ul><ul><li>Published: 1952, Harry Markowitz </li></ul><ul><li>Reintroduction: 1964, Merton Miller & William Sharp </li></ul><ul><li>Computerization: June 1, 1987 </li></ul><ul><li>Key Directions: </li></ul><ul><li>More Value over Less, prefers Less Risk to More Risk </li></ul><ul><li>Optimal Portfolio </li></ul><ul><li>Probability of Success </li></ul>Source: New York Times Journal of Financial Planning
  6. 6. Efficient Frontier of MPT
  7. 7. Real Examples of MPT <ul><li>Schlumberger </li></ul><ul><li>Palisade Corporation </li></ul><ul><li>IBM </li></ul><ul><li>Portfolio: </li></ul><ul><li>Different Assets </li></ul><ul><li>Owned by Investor </li></ul><ul><li>(Cash, Bonds, </li></ul><ul><li>Stocks, Projects) </li></ul><ul><li>Application: </li></ul><ul><li>Selection, Control, </li></ul><ul><li>Evaluation </li></ul><ul><li>Best Set of Mix Assets </li></ul>Source: IBM.com Wikipedia.org
  8. 8. Summary <ul><li>MPT (Modern Portfolio Theory) </li></ul><ul><li>Optimal Portfolio </li></ul><ul><li>Strategies </li></ul><ul><li>Source: New York Times </li></ul><ul><li>Journal of Financial Planning </li></ul><ul><li> </li></ul>
  9. 9. Nobel Price: Harry Markowitz, Merton Miller, William Sharp 1990, Financial Economics Source: New York Times

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