Lyxor ChinaH Versus Lyxor MSIndia: Portfolio Risk and Return

Name: Lyxor ChinaH Versus Lyxor MSIndia: Portfolio Risk and Return
SKU: 9B16N004_P

Ruth S.K. Tan; Zsuzsa R. Huszar; Weina Zhang

Product #:9B16N004_P

Supplier:Ivey/NUS

Discipline:Finance

Setting:2015

Details:Exercise (PDF) • 3 pages • 2016-02-02 (Rev: 2016-01-28)

Subjects:

Diversification Corporate strategy Finance and investing

Industries:

Financial service sector

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In September 2015, Susie reflected on the performance of her personal investment portfolio over the past seven years. Susie had invested in two exchange traded funds (ETFs): Lyxor ChinaH and Lyxor MSIndia. She was now considering Lyxor USDJIA as a third ETF to diversify her risk. This analysis would involve the concept of portfolio diversification and the application of the capital asset pricing model. In addition, Susie would need to calculate mean returns, standard deviations, covariances, correlations, betas, and required returns in order to fully assess the merits of her decision. Although Susie had been satisfied with her portfolio performance over the past seven years, the high growth in these two emerging markets had fizzled out lately. Should Susie diversify her portfolio or remain invested in China and India only?

Learning Objectives

This case can be used in an undergraduate or MBA course in personal financial management or fundamental financial management. After completion of the case, students should be able to:

Apply the concept of portfolio diversification.
Apply the capital asset pricing model.
Calculate mean returns, standard deviations, covariances, correlations, betas, and required returns to assess financial risk.