Student Reflective Learning Blog

In the fourth week of lectures we were taught on the topic modern portfolio theory. This theory is an investment theory, based on the idea that risk-averse investors can create portfolios to max out the expected return based on a given level of market risk  considering that this risk is part of the reward.  This is one of the most important theories behind finance and investments. Another factor that this theory suggests is that investors given two portfolios would prefer the less risky one over the other. Therefore this suggests that investors will be willing to go for high risk portfolios if the return is fairly high compared to the other. this means that an investor must undergo a higher risk if they are aiming for a higher reward.  The same theory applies for each and every investor. Each investor will evaluate this theory in many different ways. A method which could be used to reduce the portfolio risk would be  by holding co...

In the third week of lectures, I was educated on capital markets and its efficiencies. Capital markets fall under two categories, namely primary markets and secondary markets. Primary markets permit the insurance of new securities from the issuer to the investor.  The main objective of primary markets is a efficient and liquid environment where price adjustments can happen instantly (price discovery and formation). On the other hand secondary markets is based  on the idea where something is trade after having initially sold.  A few examples of major stock exchanges which consists both of these are FM, FTSE and ASI.  Meanwhile, the main role of capital marketing is the efficient allocation of the economy's capital stock and allocation of these stocks. Capital market efficiency states that capital markets occur when share prices would reflect all the available necessary data.  Capital markets could be made more efficient by adjusting security p...