In this article we will discuss about:- 1. Introduction to Markowitz Theory 2. Assumptions of Markowitz Theory 3. Diversification 4. Criteria of Dominance 5. Measurement of Risk. Contents: Introduction to Markowitz Theory Assumptions of Markowitz Theory Diversification of Markowitz Theory Criteria of Dominance Measurement of Risk 1. Introduction to Markowitz Theory: Harry M. Markowitz is credited with introducing new concepts [...]
Risk is uncertainty of the income/capital appreciation or loss of both. The two major types of risk are- Systematic or market related risks and unsystematic or company related risks. The systematic risks are the market problems, raw material availability, tax policy or any Government policy, inflation risk, interest rate risk and financial risk. The unsystematic risks are mismanagement, increasing inventory, [...]
In this article we will discuss about the analysis of return and risk on portfolio of a company. Return on Portfolio: Each security in a portfolio contributes returns in the proportion of its investment in security. Thus, the portfolio expected return is the weighted average of the expected returns, from each of the securities, with weights representing the proportionate share [...]