FIN8330_Chapter7_Slides0

FIN8330_Chapter7_Slides0 - Investment Analysis and...

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Unformatted text preview: Investment Analysis and Portfolio Management by Frank K. Reilly & Keith C. Brown C h a p t e r 7 C h a p t e r 7 An Introduction to Portfolio Management Some Background Assumptions Markowitz Portfolio Theory 7-2 Some Background Assumptions As an investor you want to maximize the returns for a given level of risk. Your portfolio includes all of your assets and liabilities. The relationship between the returns for assets in the portfolio is important. A good portfolio is not simply a collection of individually good investments. 7-3 Some Background Assumptions Risk Aversion Given a choice between two assets with equal rates of return, risk-averse investors will select the asset with the lower level of risk Evidence Many investors purchase insurance for: Life, Automobile, Health, and Disability Income. Yield on bonds increases with risk classifications from AAA to AA to A, etc....
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This note was uploaded on 01/24/2012 for the course FIN 4360 taught by Professor Davidbray during the Spring '12 term at Kennesaw.

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FIN8330_Chapter7_Slides0 - Investment Analysis and...

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