Optimum Speculative Portfolio For Small Investors
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Date
1994-06
Authors
Lee Nai, Lim
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Abstract
The main purpose of this study is to empirically determine the optimum
portfolio from the 25 speculative stocks in Kuala Lumpur Stock Exchange
(KLSE) for small investors. There are four optimum portfoli.os in this
research report: ..
(a) An optimum portfolio for 1987 to 1993;
(b) An optimum portfolio for the first half per~od of January 1987 to
July 1990;
(c) An optimum portfolio for the second half period of August 1990 to
December 1993; and
(d) a future optimum portfolio based on the estimated future Beta that
was derived from the past two equal-half periods' Betas.
Sharpe's Single Index Model has been used to construct and identify the
optimum portfolios. Optimum portfolios h~ve been worked out both for
the market as well as for the investors, who may lend or borrow ~rying
amounts ..
The finding of the study is that the stocks in the optimum portfolios
have not been so popular among the investors in Malaysia. Evidence
shows that the returns from the optimum portfolios for the first half
period and the second half period are higher than those for the period
as a whole. Evidence also shows that the inclusion of the dividend in
calculating the stock return has some impact on the portfolio return and
risk despite the fact that the speculative stocks pay a small dividend
only.
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Keywords
Optimum Speculative Portfolio , For Small Investors