Abstract:
In the single period Markowitz model, the investor maximizes the expected return of
the portfolio and minimizes the risk, measured by the variance of the portfolio returns.
Investor considering investments in sectors under GSE is faced with the problem of
choosing from a large number of sectors and how to allocate his funds over this group
of sectors due to the reforms that occur at the various sectors. As a result, the recent
financial crises which has led to the extinction of many institutions such as GN Bank,
UT Bank and more have made old literatures on portfolio optimization on the Ghana
stock exchange vulnerable. This is because some equities that were considered in
portfolio are no more in existence. This issue is addressed by creating a new portfolio
optimization after this financial sector reforms. A historical secondary data of nineteen
companies were obtained from Ghana Stock Exchange. Variance-Covariance,
Correlation and Standard Market Model methods were employed to determine stock
and portfolio performance in the Ghanaian financial market. Models were developed
to maximize returns and minimize risk. 38.84 percent stock index were found
aggressive and 26.32 percent stocks overperformed. For investor to take up
investment decision TOTAL, AYRTN, UNIL and CLYD were efficient and the most
efficient stock is UNIL. The study finally recommended that, prospective investors
especially the risk averse to take up risky investments via diversification using the
research outcome as working tool. Companies on the GSE are also expected to put
in place measures that can help improve on performance with respect to dividend
payment and returns that the companies pose. Portfolio managers should constantly
restructure their portfolio due to reforms that occur at various sectors of the GSE
