What is expected return on a portfolio, Risk Management

Q. What is Expected Return on a Portfolio?

The Expected Return on a Portfolio is simply' the weighted average of the expected returns of the individual securities in the given portfolio. Where Rp = Expected Rate of Return in a Portfolio Wi = Proportion of total investment invested in that asset Rj = Expected Rate of return as the Security

n = number of securities in a given portfolio

Suppose your Expected Rate of Return from Agarawal Mills (AML) stock is 20 percent during a given holding period and the same rate of return in case of Gupta Mills (GM) scrip is, say 16 percent and you are interested in putting your total investment equally in both these securities, then the Expected

Rate of Return from the Two-Asset Portfolio is suppose you are interested in including the Tinkuji Mills scrip also into your Portfolio, by partly selling of your earlier investment in Gupta Mills, say about 20 percent of total investment and if your Expected Rate of return from Tinkuji Mills in 22 percent during the same said holding period, then the Return from the Asset Portfolio would be Portfolio Risk.

We have seen that the Portfolio Rates of Return are just the weighted average rates of Return of individual assets in the given portfolio. But the calculation of portfolio risk is not similar to weighted average of individual assets' total risk. Portfolio's risk is sometimes substantially different from individual assets risk. It is quite possible that the individual assets may be substantially risky with sizeable Standard Deviations and when combined may result in a Portfolio which is absolutely riskless.

Posted Date: 6/19/2013 7:39:34 AM | Location : United States







Related Discussions:- What is expected return on a portfolio, Assignment Help, Ask Question on What is expected return on a portfolio, Get Answer, Expert's Help, What is expected return on a portfolio Discussions

Write discussion on What is expected return on a portfolio
Your posts are moderated
Related Questions
Question 1: (i) Describe five steps to risk assessment for work-related driving activities. (ii) List ten important points which employers should consider to ensure that wo

Question: Under Section 6 of the Occupational Safety and Health Act 2005, employers have a statutory duty to prepare and keep revised a written statement of their safety and he

A former alumna of the University, who originated Racoon.com ((ticker: COON1), recently passed away. In her Will, she named X-University as the beneficiary of her assets, which was

You work for a company that sells expensive equipment to other companies. The marketing director has closed on a substantial sale (for your company) but the customer has requested

Imagine you are the Chief Risk Officer of a newly-formed bank, with a focus on corporate lending in Slovakia. The bank is largely funded by local deposits. The CEO (and so does t

Q. Capital market line? When their exists complete agreement between all investor with regards to a security Expected return, variance and covariance as well as on the rate of

Data Security: An important issue for all organisations is the security of data. Just as documentation require physical security in the face of risk of theft / fire etc, electr

(i) Calculate the unweighted average daily variance for the time series. Explain any assumptions or simplifications you have made, and the working for each step.

"CONSUMER MIND IS A BLACK BOX"

1. You are to analyze:  [1] internal financial options offered to employees as a benefit, [2] the external financial options that are offered by markets to outside investors who ma