Thesis (M.Sc.) - Cairo University - Faculty of Economics and Political Science - Department of Economics

Financial markets including Equity, Fixed-income and Derivatives marketcould be split into domestic or international market where the traded securities issued by domestic issuers i.e. corporates, government or by foreign entities.Risk could be defined as level of variability and volatility. So, total investment risk could be measured with such common absolute measures used in statistics as Variance and its square root; Standard Deviation, Tracking Error and Information Ratio which used to estimate total expected risk in the defined period in the future and other relative measures such as Correlation Coefficient and Ý Coefficient. In addition to other measures as Sharp Ratio, Jensen Alpha and Treynor.There are many different analysis approaches, most frequently forms of analysis are: Technical Analysis that analyze traded stocks historical market prices to predict future target price movements and Fundamental analysis that analyzecompany revenues, sales and profits predict future fair value for traded financial assets traded in the market. According to Markowitz, he showed that for a given level of expected return and risk for a given feasible set of securities, investor could find the optimal portfolio with the lowest total risk measured by variance or standard deviation of portfolio returns with taking into consideration covariance or correlation between all possible securities. According to Market efficiency theory, which stated that price which investor pays for financial asset (stock, bond) fully reflects the fair value of the company

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