Abstract
An investment portfolio can contain a variety of assets, including cash, stocks, bonds, financial derivatives, precious metals, and cash. You shouldn't invest all of your money in the same thing, similar to the adage "don't put all your eggs in one basket." Put your eggs in a variety of baskets so that even if one breaks, they will remain safe. In this study, five equities—Eli Lilly, Amazon, FedEx, J.P. Morgan Chase Bank, and Pfizer—are constructed using the Markowitz Mean-Variance Model and Effective Frontier. The portfolio is built using data from these five stocks during the previous three years. Given that stocks can be shorted, the portfolio has a Sharpe Ratio of 9.07%, a yield of 2.99%, and a ceiling of negative 1 for each stock. The risk of this best answer, which was determined by solving combinations, is 9.63%. The usual 10-year Treasury bond's average return is 2.12%, which is less than the ideal yield.
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