Investment Portfolio Project University of Phoenix Introduction needs to go here | | |5 Yr Average | | | |Return | |T-bond |25% |0.02 | |Microsoft |20% |-0.33 | |Time Warner |10% |0.11 | |Disney |20% |0.02 | |Motorola |10% |-0
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FINANCIAL INSTITUTIONS AND PORTFOLIO MANAGEMENT FINANCIAL INSTITUTIONS AND PORTFOLIO MANAGEMENT Introduction The household has two sources of income namely the husband earning $100,000 per year as a middle level manager in a fortune 500 Company and the wife who is an attorney and also earns $100,000 per year. The couple has no children and as such they do not have expenses such as school fees, upbringing costs for the children. The couple is middle aged and as such their appetite to risk is
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Australian School of Business School of Banking and Finance FINS 2624 Portfolio Management Course Outline Semester 2, 2012 Part A: Course-Specific Information Part B: Key Policies, Student Responsibilities and Support Table of Contents 0 PART A: COURSE-SPECIFIC INFORMATION 1 2 2.1 2.2 2.3 2.4 2.5 3 STAFF CONTACT DETAILS COURSE DETAILS Teaching Times and Locations Units of Credit Summary of Course Course Aims and Relationship to Other Courses Student Learning Outcomes LEARNING AND TEACHING
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avoided through diversification. Whereas this type of risk affects a broad range of securities, unsystematic risk affects a very specific group of securities or an individual security. Systematic risk can be mitigated only by being hedged. Even a portfolio of well-diversified assets cannot escape all risk. ________________________________________________________________________________ Definition of 'Unsystematic Risk' Company or industry specific risk that is inherent in each investment. The amount
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* (portfolio risk) Total risk= diversifiable + non-diversifiable * Standard deviation measures total risk * Beta coefficient measures systematic risk (Non-diversifiable risk) * High beta, high risk * Which component can be reduced (diversified away)? How? * Diversifiable risk * Eliminates unsystematic risk and reduces total risk * Correlation and the ranges between -1 and 1 * Systematic risk is reduced through portfolio diversification
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Theory Investment/Portfolio M3: Assignment 1 Discussion B6201-P Roger Thornhill What makes for good diversification in a portfolio investment? How do you achieve diversification? Portfolio diversification is a necessity for risk minimized investing. Things that can happen to an undiversified investor were seen through the 401k vested employees of Enron before and after their scandal. During the 1990’s and early 2000’s before it was discovered that Enron’s accounting practices where fraudulent
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will most likely stay constant. d. a change in unsystematic risk has occurred; company price will most likely decline. e. no change in systematic risk; market prices in general will most likely stay constant. 5. No to both questions. The portfolio expected return is a weighted average of the asset returns, so it must be less than the largest asset return and greater
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Applied Microeconomics Coursework 1 Aim To derive and describe the effect of stock 2 and that of correlation between stock 1 and 2 prices on the overall portfolio risk. Introduction Standard deviation (SD) is used to measure risk by determining the volatility of a stock. It is a statistical term that measures the amount of variability around an average mean price. Correlation measures the relationship between two variables. Coefficient of Correlation can range between -1 and +1
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framework concerning two-fund separation that each investor will have a utility-maximizing portfolio that is a CML combination of the risk free asset and the tangency E (r ) I portfolio. If all investors see the same capital allocation M ! ! line, they will all have the same linear efficient set called E (r ) ! the Capital Market Line (CML). This forms a linear ! ! relationship between expected return of the portfolio and r the standard deviation. If market equilibrium is to exist we know that the prices
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Betting Against Beta Andrea Frazzini and Lasse H. Pedersen* This draft: October 9, 2011 Abstract. We present a model with leverage and margin constraints that vary across investors and time. We find evidence consistent with each of the model’s five central predictions: (1) Since constrained investors bid up high-beta assets, high beta is associated with low alpha, as we find empirically for U.S. equities, 20 international equity markets, Treasury bonds, corporate bonds, and futures; (2) A
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