Overview of the Investment Environment

The Capital Markets and Investment Banking Process is new & quite confusing to me. I have to write a 1100 word essay which I analyze the investment banking process. In the paper be sure to address the following:

a. Describe the investment banking process including portfolio construction.

b. Describe the factors that should be considered when selecting among asset classes for an investment portfolio.

c. Describe the capital market instruments used in investment portfolio construction.

d. Make general recommendations for the composition of an investment portfolio. Be sure to include the rationale for your recommendations.

Please be sure to include an introduction, conclusion, and cite references.

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...reases, funds get their earnings from countries outside their place of stay. The construction of portfolio involves looking at the securities in the portfolio from different viewpoints and incorporating large amounts of data accessible to fund managers(Jorgenson,D,W & Yun, K,Y, 1996),.

b. Describe the factors that should be considered when selecting among asset classes for an investment portfolio.
The investment should consider the different asset classes. Asset classes refer to a group of securities that show similar characteristics and behave similarly in the marketplace. Usually one assets class is affected by the same set of regulations. Broad asset classes are equities, fixed-income securities, and cash equivalents. Selecting among asset classes has an assumption. The assumption is that in different years, different asset classes perform the finest. However, if a particular year is selected it difficult to forecast which asset class will perform well in that year. From the arithmetical point of view different classes of assets offer returns that are not perfectly correlated. So, if an investor needs to reduce the variability of returns from the assets for a given level of expected returns, the investor has to diversify among the asset classes. Even if the correlations are based on past returns on investment classes, these returns may not happen in future(Ellis, C, 2004), .
If we consider asset classes in detail we have precious metals, collectibles like art and costly automobiles, real estate, natural resources, stocks and bonds. There are other classifications of assets like growth, blend and value. However, the assets selected for investment portfolio are typically of the four classes. The first are stocks, there are stocks of different levels of risk that the investor may want to carry in the equity portion of the portfolio. The sector, market cap and stock type are some of the issues that are considered when selecting the stocks. The second asset class is that of bonds. The issues that an investor must consider when selecting bonds are coupon maturity, the band type and the rating of the bonds. Moreover, the ...