Function as a Tool in the Investment Portfolio Management

The aim of the article “Function as a tool in the portfolio management” is to perform the alternative method of presentation of financial instruments derivatives. The new method of presentation provides clearer view on financial instruments mechanics and gives possibility to construct an investment portfolio more easily. The method of presentation assumes that every asset can be presented as a function on the XY graph, where Xaxis responds to the price of base financial instrument and Y-axis responds to the possible gains or losses related to the change in price of base financial instrument. The application of functions as financial instruments gives possibility to use mathematical operations allowed on functions, as function summarizing that provides a possibility to construct a diversified investment portfolio from different financial derivatives based on the same base financial instrument. The method of presentation is useful for people that would like to understand better the mechanics of financial instruments and for stock investors