Inancial Investment AnalysisEfficient Diversification

Discuss:
a?The concept of efficient diversification implies that for an investor wishing to efficiently assume risk in their investment portfolio; the risky part of the portfolio should consist of weighted proportions of all possible risky assets.a?
You are asked to discuss the statement above with reference to the following guidelines:
1. An explanation and critical evaluation of the statement.
2. A discussion of whether investors actually do efficiently diversify their portfolios.

Marks will be awarded based on the following:
1. Presentation of assignment and clarity of expression. Presentation should show a polished coherent structure. Thoughts and ideas should be clearly expressed in a fluent academic writing style.
2. Attention to the purpose of the assignment. The purpose of the assignment should be addressed comprehensively and imaginatively.
3. Critical analysis of appropriate literature. The assignment should demonstrate an application of critical analysis and arguments should be well integrated.
4. Illustrations. The assignment should show use of examples and evidence. Appropriate examples should be fully and reliably integrated and evaluated.
5. Conclusions. Should be analytical and clear, well grounded in theory and literature showing reflection upon key issues.