Constructing and Managing a Portfolio Simulation - Memo

Essay by dasiasmommy May 2010

download word file, 4 pages 0.0

Constructing and Managing a Portfolio � PAGE �6�

Constructing and Managing a Portfolio Simulation - Memo

Jamila Lewis

University of Phoenix

INVESTMENT FUNDAMENTALS AND PORTFOLIO MANAGEMENT, FIN 402

Instructor: STEVEN PETRIZZI April 12, 2010

Constructing and Managing a Portfolio Simulation - Memo

MEMORANDUM

To: Rainier Ekstrom, CEO

Casa Bonita

From: Jamila Lewis, Treasure Analyst

Casa Bonita

Re: Risk and Return Tradeoff

The method of portfolio construction can be multifaceted from beginning to end. Financial analysts comb through a large amount of statistics, including: industry knowledge, past performance, and future potential. Analysts also rely on personal expertise into the market to arrive at the final list (UNIVERSITY OF PHOENIX, 2010). Casa Bonita Ceramics was created by an artist named Juan Peres Fuentes. Juan was introduced to tile making by his family. Casa Bonita was a professionally run business that capitalized on its Spanish and Mexican heritage and customers (UNIVERSITY OF PHOENIX, 2010).

Casa Bonita is one of the largest tile manufacturers in the United States with annual revenues of $150 million (UNIVERSITY OF PHOENIX, 2010). Casa Bonita offers floor and wall tiles in glazed and unglazed ceramic, mosaic and porcelain, in addition to a wide range of quarry tiles (UNIVERSITY OF PHOENIX, 2010).

This memo will detail the choices I made in the Constructing and Managing a Portfolio Simulation. This simulation details the fundamentals of portfolio construction as it relates to the risk-return tradeoff and the relationship between investment strategy and investment performance (UNIVERSITY OF PHOENIX, 2010). In addition, this memo will discuss the Sharpe ratio and how it relates to investment decisions.

As the Treasury Analyst for Casa Bonita, my job included preparing investment reports and developing comprehensive cash flow statements, in addition to performing risk analysis, forecasting, and statistical evaluations. In 2004 Casa Bonita generated excess cash and decided...