Investors venture into any business with the objective of making optimum returns from their equities and other portfolios. In school, especially in the field of finance, I have learned the application of finance theories in the business world. The acquired knowledge has helped to shape my ideas today in terms of how organizations can ensure optimal returns to investors. Some of the key theories that influence my new ideas in the corporate world include the modern portfolio theory (MPT), the theory of equilibrium, and the efficient market hypothesis.
In the future, I wish to work as a financial market analyst who can help investors make informed investment choices on equities and various portfolios. In preparation for this task, as a student, I am engaging in an in-depth search for knowledge concerning various models that apply to finance theories. The goal is to equip me with sound theoretical frameworks, which can later be useful in my future practice. For example, through the modern portfolio theory, I have been looking for various ways in which rational investors can deploy diversification to guarantee increased optimization of portfolios, including the way assets, are financed, considering the prevailing risks in the financial market.
Spending time on finance theories has had the outcome of understanding various models that relate to each theory. This understanding is pivotal in establishing high returning portfolios. For instance, the MPT has concepts such as “efficient frontier, Capital Asset Pricing Model, beta coefficient, the Capital Market Line, and the Securities Market Line.” Each of the concepts helps in diverse ways to manage portfolio threats. My plan is to deploy the knowledge acquired in my business enterprise to make proposals on the most appropriate finance theory and models in portfolio management, bearing in mind the prevailing risks and nature of business of a given organization that trades in portfolios and equities.