Open Yale CoursesECON 252: Financial MarketsLecture 4 - Portfolio Diversification and Supporting Financial Institutions(CAPM Model)<< previous session| next session >>Overview:Portfolio diversification is the most fundamental concept of risk management. The allocation of financialresources in stocks, bonds, riskless, assets, oil and other assets determine the expected return and risk of aportfolio. Taking account of covariances and expected returns, investors can create a diversified portfolio thatmaximizes expected return for a given level of risk. An important mission of financial institutions is toprovide portfolio-diversification services.Reading assignment:Fabozzi et al. Foundations of Financial Markets and Institutions
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This note was uploaded on 02/08/2012 for the course ECON 252 taught by Professor Robertshiller during the Spring '08 term at Yale.