Investment Portfolio

Corporate Finance Andrea Corbridge is an investor who is considering investing in the stock portfolios of the Adelphia Technologies and Kalama Corp. The paper uses the Excel software to calculate the possible investment combination of the two portfolios. Based on the expected returns and the standard deviations of the two equities, the paper calculates the optimal investment combinations from 0% to 100% and the findings reveal there will be 18.65% expected returns from the investments.

Based on the information on the two portfolios, it is advisable for Andrea to investment 39% ($19,736.84) of his $50,000 in the Kalama Corp equity and 61% ($30,263.16) in the Adelphia Technologies equity to earn 19% expected returns. Major reason is that the returns of the equity of Adelphia Technologies are higher than the returns of the Kalama Corp equity. By using the 39% and 61% investment combination, Andrea is likely to earn 19% expected returns from the two investment portfolios.

However, the paper suggests that investing in the Medford Barnett Corporation (MBC) equity portfolio is not a good decision because the share price of the MBC investment portfolio is likely to decline in the future. The paper uses the 3-month moving average to forecast the share prices of the MBS stock portfolio in the next 12 months.

The findings reveal that its stock price is likely to decline from $52.03 to $46.19 within the next 12 months, which will make Andrea to record a loss from the investment if eventually he decides to sell the stocks after 12 months. 1. The data in the Table 1 reveals the possible investment combination for the Kalama Corp. And Adelphia Technologies. (Graham, Smart, & Megisson, 2010). The paper uses the Excel software to calculate the optimal combination for the two equity portfolios, and the results are in the Table 1 reveals the output of the optimal combination. Table 1.

Possible Investment Combination for the Kalama Corp. And Adelphia Technologies. Inputs Standard Expected Expected Deviation Returns Risk Free Rate Risk Free Rate 0% 3% 0% Kalama Corp.

23% 15% 12% Adelphia Technologies 32% 23% 20% Correlation -0.1789 Outputs Optimal (x-axis) Trade off Curve Trade off line Combination Standard Expected Expected Deviation Returns Return Trade off 0% 0.3189 0.2311 Trade off 1.00% 0.31530147 0.230275 Trade off 2.00% 0.31172007 0.22945 Trade off 3.00% 0.30815641 0.228625 Trade off 4.00% 0.30461112 0.2278 Trade off 5.00% 0.30108483 0.226975 Trade off 6.00% 0.29757822 0.22615 Trade off 7.00% 0.29409201 0.225325 Trade off 8.00% 0.29062691 0.2245 Trade off 9.00% 0.2871837 0.223675 Trade off 10.00% 0.28376318 0.22285 Trade off 11.00% 0.28036616 0.222025 Trade off 12.00% 0.27699353 0.2212 Trade off 13.00% 0.27364618 0.220375 Trade off 14.00% 0.27032504 0.21955 Trade off 15.00% 0.2670311 0.218725 Trade off 16.00% 0.26376538 0.2179 Trade off 17.00% 0.26052893 0.217075 Trade off 18.00% 0.25732287 0.21625 Trade off 19.00% 0.25414834 0.215425 Trade off 20.00% 0.25100654 0.2146 Trade off 21.00% 0.2478987 0.213775 Trade off 22.00% 0.24482614 0.21295 Trade off 23.00% 0.24179018 0.212125 Trade off 24.00% 0.23879224 0.2113 Trade off 25.00% 0.23583374 0.210475 Trade off 26.00% 0.23291621 0.20965 Trade off 27.00% 0.2300412 0.208825 Trade off 28.00% 0.22721032 0.208 Trade off 29.00% 0.22442524 0.207175 Trade off 30.00% 0.22168769 0.20635 Trade off 31.00% 0.21899945 0.205525 Trade off 32.00% 0.21636236 0.2047 Trade off 33.00% 0.21377831 0.203875 Trade off 34.00% 0.21124925 0.20305 Trade off 35.00% 0.20877718 0.202225 Trade off 36.00% 0.20636414 0.2014 Trade off 37.00% 0.20401223 0.200575 Trade off 38.00% 0.20172359 0.19975 Trade off 39.00% 0.19950039 0.198925 Trade off 40.00% 0.19734485 0.1981 Trade off 41.00% 0.19525921 0.197275 Trade off 42.00% 0.19324573 0.19645 Trade off 43.00% 0.19130669 0.195625 Trade off 44.00% 0.18944437 0.1948 Trade off 45.00% 0.18766106 0.193975 Trade off 46.00% 0.18595904 0.19315 Trade off 47.00% 0.18434055 0.192325 Trade off 48.00% 0.18280781 0.1915 Trade off 49.00% 0.18136299 0.190675 Trade off 50.00% 0.18000823 0.18985 Trade off 51.00% 0.17874555 0.189025 Trade off 52.00% 0.17757693 0.1882 Trade off 53.00% 0.17650423 0.187375 Trade off 54.00% 0.17552921 0.18655 Trade off 55.00% 0.17465351 0.185725 Trade off 56.00% 0.17387864 0.1849 Trade off 57.00% 0.17320593 0.184075 Trade off 58.00% 0.17263659 0.18325 Trade off 59.00% 0.17217164 0.182425 Trade off 60.00% 0.17181194 0.1816 Trade off 61.00% 0.17155813 0.180775 Trade off 62.00% 0.17141069 0.17995 Trade off 63.00% 0.17136991 0.179125 Trade off 64.00% 0.17143584 0.1783 Trade off 65.00% 0.17160838 0.177475 Trade off 66.00%.