Alex Sharpe’s portfolio

Research output: Contribution to specialist publicationArticleEducation


Alex Sharpe's Portfolio provides an introduction to the Capital Asset Pricing Model (CAPM), portfolio diversification and risk management. Sharpe currently holds the Vanguard 500 Index Fund, but is considering a more active management strategy. Students must assess the risk of the two stocks she is considering adding to her portfolio. Students are provided with monthly stock returns and must calculate the standard deviations of the individual stocks and of the portfolios when one of the stocks is added to it. Students must calculate the stock's beta using regression and will learn that beta is the appropriate measure of risk to use in decision making since risk-averse investors do not hold stocks in isolation.
[Extract]On Friday, January 26, 2007, Alex Sharpe sat in her home office and pondered her investment strategy. During her MBA program, Sharpe had learned that in an efficient market, investors should buy and hold the ‘market portfolio’ because no other portfolio can offer the same expected return at a lower risk. Since the Standard & Poor’s (S&P) 500 was the most commonly used benchmark for the overall U.S. stock market, Sharpe had invested her children’s educational savings in the Vanguard 500 Index Fund, a no-load mutual fund constructed to track the performance of the S&P 500.
Original languageEnglish
Number of pages4
Specialist publicationIvey Publishing [Case Studies]
PublisherIvey Business School
Publication statusPublished - 7 Dec 2008


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