Content Writing

Modern Portfolio Theory (MPT) For nearly 45 years now (since the 1970’s) the management of an institution’s portfolio of activities has been a focal point of strategic financial management. In this domain, the concepts developed mostly centre on or around the success of investment prospects, resource allocation and security selection. As a consequence, the risk management of companies has also gained considerable notice in recent years especially after the recent financial crisis. Some have argued though, that risk management systems, focus solely on conformity, financial and operational risks, and as such they largely discount the risks of corporate strategic decision making. Such critics have also argued that Modern Portfolio Theory (MPT) can also be viewed as a framework that can be utilised to fill this gap and integrate risk as an integral part of the strategic decision-making process of corporate portfolio management. Based on the existing knowledge and literature regarding the association between strategy and risk, you are required to perform a theoretical study of the purpose of key concepts and relationships of MPT in a corporate financial management environment. More specifically, you are required to develop an exposition of: - The relevance of incorporating risk in strategic financial management - Criticisms and limitations of the Transferability of Modern Portfolio Theory - Consequences of this (often considered) inconclusive relationship - The theoretical possibilities and limitations of MPT in a corporate management context The purpose is to expose and critically discuss the potential strengths and weaknesses of such a framework’s applicability. Demonstrate extensive reading over a wide range of sources so as to demonstrate an understanding of the theory as well as its implications.