Abstract
This paper covers a project in which beginning investment students collect price and dividend data and calculate various returns for five companies, a fund and the stock market. After forming a portfolio they calculate risk measures, determine Jenson’s alpha, Sharpe and Treynor values and the return based on the Capital Asset Pricing Model. The students calculate two-stock frontiers and a frontier comprised of potentially all five stocks, incorporate the Capital Allocation Line (CAL) and determine the optimal portfolio. Finally, they calculate dollar amounts to invest in the riskless asset and risky stocks to accomplish dominant points on the CAL and determine if margin trading is necessary for a specific dominant portfolio.
Recommended Citation
(2026)
"Portfolio Optimization Incorporating the Capital Allocation Line: A Comprehensive Undergraduate Investments Course Project,"
Journal of Economics and Finance Education: Vol. 16:
Iss.
1, Article 9.
Available at:
https://scholarship.rollins.edu/jefe/vol16/iss1/9
