Investment_Valuation

Investment_Valuation - Investment Analysis FNGB 7430...

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Investment Analysis FNGB 7430 Investment Valuation
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Available Investment Options Put your money under your mattress. Put your money in the bank or buy bonds from the government. You will be guaranteed an interest rate and your money back with no risk or little risk. Buy bonds sold by corporations. You will earn a higher interest rate than what the bank or the government guaranteed, but you can loose little or all of your money. Other investment options that can earn you more: buy a business, buy real estate or invest in the market.
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Risk and Return * Portfolio C *Portfolio A'' * Portfolio B *Portfolio A' *Portfolio A Risk (Standard Deviation) Rate of Returns U.S. Treasury Efficient Frontier More Risk Higher Returns X Z Y
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Risk and Return Properties Two Stocks Portfolio Exam ple Returns (r) Risk- Std (R) Weight (W) Stock A 10.00% 20.00% 25% Stock B 15.00% 25.00% 75% Portfolio Return is: (r A *W A ) + (r B *W B ) = 13.75% Portfolio Risk is NOT : (R A *W A ) + (R B *W B ) <> 23.75% Markowitz, Harry M. (1952). "Portfolio Selection". Journal of Finance 7 (1): 77-91.
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Investment_Valuation - Investment Analysis FNGB 7430...

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