The traditional approach basically deals with two major decisions. They are:....
Portfolio is a combination of securities such as stocks, bonds and money market instruments. The process of blending together the broad asset classes ....
Sharpe had provided a model for the selection of appropriate securities in a portfolio. The selection of any stock is directly related to its excess r....
Casual observation of the stock prices over a period of time reveals that most of the stock prices move with the market index. When the Sensex increas....
Utility is the satisfaction the investor enjoys from the portfolio return. An ordinary investor is assumed to receive greater utility from higher retu....
The risk and return of all portfolios plotted in risk-return space would be dominated by efficient portfolios. Portfolio may be constructed from avail....
All the graphs show the portfolio risks under varying levels of correlation co-efficients. All the figures can be assembled together and placed in a s....
Portfolio risk can be reduced by the simplest kind of diversification. Portfolio means the group of assets an investor owns. The assets may vary from ....
Most people agree that holding two stocks is less risky than holding one stock. For example, holding stocks from textile, banking, and electronic comp....
The expected return of a portfolio is the weighted average of the returns of individual securities in the portfolio, the weights being the proportion ....
So far we have considered a portfolio with only two securities. The benefits from diversification increase as more and more securities with less than ....
The process of combining securities in a portfolio is known as diversification. The aim of diversification is to reduce total risk without sacrificing....
The variance of return and standard deviation of return are alternative statistical measures that are used for measuring risk in investment. These sta....
As a first step in portfolio analysis, an investor needs to specify the list of securities eligible for selection or inclusion in the portfolio. Next ....
Individual securities have risk return characteristics of their own. The future return expected from a security is variable and this variability of re....
An efficient market has been defined as one where share prices always fully reflect available information on companies. In practice, no existing stock....
There are three broad theories concerning stock price movements. These are the fundamental analysis, technical analysis and efficient market hypothesi....
The strong form hypothesis represents the extreme case of market efficiency. The strong form of the efficient market hypothesis maintains that the cur....