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Modern Portfolio Theory Part 7 | April, 18, 2011 Trading strategies are like casino gambling. You pay your money and you take your chances. But there are more reliable ways […]
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Introduction and Overview Modern Portfolio Theory suggests that you can maximize your investment returns, given the amount of risk (or volatility) you are willing to take on. This is the […]
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Managing the Riskless Portfolio An investor can limit risk by reducing the portion of her wealth exposed to the risky market portfolio and increasing her holdings in the riskless portfolio. […]
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Diversification and the Market Portfolio This is the second in a ten-part series exploring the implications of modern portfolio theory (MPT) for common investment decisions faced by individuals. This part […]
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Managing a Portfolio’s Risk Using a four-step plan, you can select a portfolio allocation that generates the desired risk exposure. The more volatility (risk) you can take on, the higher […]
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The Asset Allocation Decision Investment choices should be based on realistic forecasts of the risk-return trade-off and the investor’s personal preferences about how much risk to undertake. by Donald R. […]
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Insurance and Risk in MPT While there are limits on how fully investors can diversify the market portfolio, in practice insurance pools risk so that everyone can enjoy substantial diversification. […]