You are working for an investment fund, and you have recently been appointed to manage one of the company’s funds. As your responsibility, you are expected to construct a “capital gains portfolio”...

You are working for an investment fund, and you have recently been appointed to manage one of the company’s funds. As your responsibility, you are expected to construct a “capital gains portfolio” with a budget of € 50 billion. You are asked to construct an optimal portfolio based on the given objectives. Your senior manager has recently suggested you invest in stocks of companies listed at NYSE and NASDAQ Stock Exchanges rather than in your home country’s stock exchange. You are expected to explain your advice to the top managers of Exchange Lexus Inc.a) Start an introduction to portfolio theory by writing a short literature review on portfolio theory. Using portfolio theory and the theory of diversification create an effective portfolio of a minimum of 10 stocks. Use models such as CAPM, and Gordons Growth Model to assess expected returns. Explain why you chose the stocks in terms of growth stocks, value stocks, blue-chip, speculative, tech, niche etc. Calculate portfolio metrics, including Jensens Alpha, Treynor Ratio, Sharpe Ratio, Warren Buffet Ratio, the standard deviation of return, portfolio beta, covariance and correlation between assets in the portfolio.b) Given your answer work above, what do you expect to happen to your portfolio in the year 2022? What will be the capital gains? Dividend yield? What will happen under different scenarios of recession, neutral or a booming economy? Why is your portfolio the best choice, be selling.Assessment criteria:• depth of knowledge and understanding of key concepts and theories• demonstrate an ability to analyze critically and synthesis relevant information and theory• innovative and creative approach to the analysis of material• demonstrate an ability to engage in full professional and academic communication inwritten workAssessment presentation requirements:• depth of knowledge and understanding of key concepts and theories• demonstrate an ability to analyse critically and synthesis relevant information and theory• innovative and creative approach to the analysis of material• demonstrate an ability to engage in full professional and academic communication inwritten workAll written assessments are to be submitted by the deadlines set out below through Wittenborg Online.Assessments must be submitted using the correct font. Assessments are to be word processed in an appropriate 12pt font and double line spaced.Referencing must be in the standard Harvard style.Please note that there are marks awarded for following correct presentation and submission requirements. Note: The final mark will be based on the individual assignment, however, the credits of this module are garnered when there is a PASS for both the group and the individual assignment. A fail in either of the assignment means you need to retake the failed part only.