Imagine an investor focused on maximizing her returns. She might invest her funds in one security with the highest expected return. If that one security decreases, however, her whole portfolio will suffer. Most investors realize the benefits of using diversification to lower risk. In this case students examine elements of portfolio theory such as mean-variance analysis and the efficient frontier before embarking upon a series of portfolio-constructing exercises using three US blue-chip stocks.

Case id: 080205

This case is used in core curriculum