Applying Portfolio Selection: A Case of Indonesia Stock Exchange
Abstract: This study had three
objectives. First, investigated whether Modern Portfolio Theory can be applied on
the financial decisions in order to increase their wealth through investment
activities. Second, exam-ined the real behavior of each asset in terms of
capital assets pricing models. Third, determined whether our portfolio is the
best model. It is found that three different stocks listed in the Indonesia
Stock Ex-change have a
positive relationship with
market returns. The
reactions of the
investor regarding these stocks are not influenced by each
other. Lastly, the minimum variance portfolio (MVP) point which rep-resents the
single portfolio with the lowest possible level of standard deviation, occurs
when the expected return of portfolio is approximately 2.2 percent at a
standard deviation of 8.8 percent.
Author: Maria Praptiningsih
Journal Code: jpmanajemengg120033
