RISK AND RETURN ANALYSIS FOR EFFICIENT PORTFOLIO SELECTION Keywords: efficient allocation, risk and return, investment return, expectations, investment1. INTRODUCTION All investment decisions require consideration of required return, expected return and estimated risk. Markowitz (1952; 77) states that the portfolio selection process can be divided into two phases. The first phase begins with observation and experience and ends with beliefs about the future performance of available securities. The second phase begins with beliefs regarding future performance and ends with the choice of portfolio. The risk to which a company is exposed can be classified into two distinct categories, business risk and financial risk. According to Rajwade (2000; 303) risk is the uncertainty of the outcome, deriving from circumstances outside the control of the company, and which leads to the destabilization of cash flows. Correia et al. (2011; 3-3) states the term risk in financial management, indicates that there is an expectation that the actual outcome of a project may differ from the expected outcome. Risk is the measure of uncertainty about whether an investment will achieve the expected rate of return. Risk can also be viewed as uncertainty about future outcomes or the probability of an unfavorable outcome. Risk is present whenever investors are unsure of the outcome an investment will produce. Yield refers to the sum of cash dividends, interest, and capital appreciation or loss from an investment. The return on an investment is the financial result for the investor. The holding period return (HPR) or holding period return (HPY) can be used to measure historical returns2. PROBLEM STATEMENTInvestors want a... medium of paper... supported by them.4.3 Statistical Analysis / User Requirement AnalysisThe data that will be obtained will be analyzed through statistical models. The analysis method will be structured as follows: Formulation and prediction of linear programming: β as a measure of risk Selection of funds under conditions of uncertainty: variance and standard deviationReferences1. Correia C. et al (2011), Financial Management 7th edition, Juta and Company, Lansdowne, Cape Town.2. Ho W.J., Tsai C., Tzeng G. and Fang S., 2011. DEMATEL technique combined with a new MCDM model to explore CAPM-based portfolio selection, http://www.elsevier.com/locate/eswa. Access date: May 1, 2014.3. Markowitz HM, Portfolio Selection, Journal of Finance 7 (1952) 77.4. Rajwade AV (2000), Foreign Exchange International Finance Risk Management 3rd Edition, Academy of Business Studies, New Delhi