Methods to minimize the risks in international portfolio investing

Description

The purpose of this thesis is to understand the portfolio investment decision-making process and learn how to minimize the risks involved in pursuing the true value of the portfolio by internationalizing the domestic portfolio and selecting the right portfolio policies. This research's content will offer an overview of security market by illustrating the relation between portfolio risks and returns and probing the proper ways to make the right investment. The handful techniques like diversification and market models, especially CAPM—the capital asset pricing model, will be introduced. Furthermore, the study renders basic finance knowledge, theories and practices in capital market and economic elements affecting the investment decision. This paper is primarily the result of quantitative means. The actual data will be collected from NYSE, Nasdaq Composite, S&P 500 and OMX Helsinki 25. Additional ratios and figures will be obtained from Bloomberg for further analysis. By using of certain portfolios in one-year period, the portfolio theories will go through reexamination. and testing. The research will also reveal the empirical problems found in theories. The follow-up solutions for empirical problems can be regarded as contribution of this study. The author makes sure all the results and findings are trustworthy and valid.

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