Risk free assets, Risk Management

Risk free assets is one for which there is no uncertainty in its expected rate of return and hence the standard deviation of such return is zero. Generally the expected rate of risk free assets is expected to be equal to the return that one can get either from government. bonds of terms deposit with the commercial bank.

If risk free assets are include in a portfolio risk assets it is expected that the risk profile are expected to change as ell the shape of market. if we consider a two asset case the portfolio return is simply the weighted average rate of return of two assets.

Posted Date: 6/20/2013 1:41:20 AM | Location : United States

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