The State of South Carolina

Report for the investment

Objective:
An investor wants to invest money and in doing the investment he/she may have different
options to invest. The investor had $1.2 Billion to invest.
In order to invest the investor wants to know about different options into which he/she may
invest. For that purpose the investor had gained all the previous data of firms and all the
information about the financial instruments. In order to invest he/she needs to closely look for
the return from each financial instrument and also each return the companies had previously
generated. For that purpose we had calculated the average and standard deviation for the
financial instruments.

Figure 1, Annual returns from different financial instruments

As you can see from the above given figure that in order to invest in different options he/she may
also have to consider the inflation factor in the market. Furthermore now an investor have the
full data as average shows the total return can be gained from the financial instruments. The
investors not only look into the total return but he/she also look for the risk factor and for that
he/she has the standard deviation. Moreover, the standard deviation gives us information about
the risk in the market.
Combination of two Financial
Instruments:
In addition to this the investor also
intended to invest in two financial
instruments’ at a time for that we have a
solution to provide him/her. We will
calculate the variance for each and then
we will combine for two financial
instruments. Here in this figure 2 we
had calculated the average for two
financial instruments. In the next level
the investor have to look into the
weightage that he/she may be interested
in. Figure 2, Average of Two combined financial Instruments

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Return from Companies
Now we have the returns of
companies. For the investor to
choose the best investment he/she
have to look into higher return and
more stability in the company. This
may vary that some investor will
go for higher return and higher risk
but some will use the option of
lower risk and low return. We have
companies in figure 3. For the
investor it is important to go for the
option which best suits his/her
investment plans. We have
gathered all the average (tells us
about the return from each
company) and the standard
deviation (tell us about the risk
factor in each company). The
investors may opt for combination
of two companies for investment.

Figure 3, List of Companies

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Selection of two companies for better investment options.
For that purpose we have to calculate the weighted average and variance of the returns. And then
we would calculate the combined variance for the combination of two companies.

Figure 4 , Combination of two companies return.

Summary
In short the above complicated and detailed information is for the investors who are willing to
invest in different financial instruments and in different companies. For that purpose we had
done a simple analysis for the investors to look at a glance and can be able to choose their
alternative.
For an investor it is very essential to invest in those where he/she gets higher return and lower
risk but actually this not happens. For higher returns the probability of higher risk is greater. For
this reason the investor needs to invest in different combinations of financial instruments and in
different combinations of companies.

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Key Terms:
Average:
Gives us information about the returns from each companies and from each financial
instruments.

Standard Deviation:
The scatterings (deviation from mean) from the mean is given by the standard deviation.

Weightage:
The choice which you can take on combination of two alternatives. At the time of combination
of two alternatives the weightage of each.

Covariance:
This gives the information that how related the two combinations are. Either they are positively
related (they behave in same direction) and either they behave in opposite (they have different
directions). If it is zero it means that there is no relation between the two.