![Efficient Frontier Software Excel Efficient Frontier Software Excel](/uploads/1/2/5/6/125645263/915910875.png)
Since won the Nobel Prize in Economics in 1990, the Efficient Frontier has been the line in the sand under which portfolio managers wiggle their toes. The efficient frontier is a major component of his Modern Portfolio Theory, which brought him the big prize.
We also implement a direct analytic solution for generating the efficient frontier when there are no inequality constraints using the matrix functions in Excel. Efficient frontier of investments for the class, find the specific asset weightings that produces. Once the basic portfolio is developed, the results can be modified to. Which many more computer software resources can accommodate.
![Efficient Efficient](/uploads/1/2/5/6/125645263/547750658.png)
In the 1950s Markowitz was researching the idea of the present value of investments in order to optimize the return across collection or portfolio of these, and he realized that the element that was missing from ideas about present value was risk. This insight led, eventually, to his prescriptions for diversifying investments to maximize the return and minimize the risk across an entire portfolio.
Financial Engineering is a multidisciplinary field involving finance and economics, mathematics, statistics, engineering and computational methods. The emphasis of FE & RM Part II will be on the use of simple stochastic models to (i) solve portfolio optimization problems (ii) price derivative securities in various asset classes including equities and credit and (iii) consider some advanced applications of financial engineering including algorithmic trading and the pricing of real options. We will also consider the role that financial engineering played during the financial crisis. We hope that students who complete the course and the prerequisite course (FE & RM Part I) will have a good understanding of the 'rocket science' behind financial engineering. But perhaps more importantly, we hope they will also understand the limitations of this theory in practice and why financial models should always be treated with a healthy degree of skepticism.