Learning Financial Analysis in MBA with R

Abstract

MBA students frequently learn financial analysis without being able to visualize the intricacies of financial algorithms; this changed with the availability of R, the free statistical data analysis language. In this paper we show how R can be used in selecting a portfolio based on the dynamic market. The selection of portfolio is crucial for an investor to get the desired return. The use of statistical tools for the selection of stocks in the portfolio is helpful in hedging the risk or to decide the level of risk the investor wants to be exposed to. Using the R language, an investor can visualize the performance of his/her portfolio by graphing the projected returns. It is a decision making tool in the selection and evaluation of the portfolio.

Keywords: Financial management, statistics, R, risk, portfolio evaluation, pedagogy