fintest1sideB

fintest1sideB - Time Horizons Planning HorizonTotal length...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Time Horizons Planning Horizon- Total length of time for which one plans usually lifetime based on income for retirement Decision Horizon- The length of time between decisions for portfolio revision Trading horizon- The minimum time interval over which an investor can revise a portfolio Speculators and Hedgers Speculators are investors who take positions that increase their exposure to certain risks in the hope of increasing their wealth. Hedgers take positions to reduce their exposures. A person can be a speculator on some exposures and a hedger on others. Types of Probability Objective probability: Probability is determined by past measures or history (of frequency) Example Batting Average in August is . 312 the probability the player gets a hit is .312 Subjective probability Probability is based on individual judgment- Different people assign different probabilities Efficient Portfolios An efficient portfolio is the best return for a set level of risk Or the lowest risk for a set level of return
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online