What is expected return on a portfolio, Risk Management

Assignment Help:

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.


Related Discussions:- What is expected return on a portfolio

Option Pricing, #question.Price a European call and put option using expli...

#question.Price a European call and put option using explicit, implicit and cranck nicholson methods in Matlab or R.

Requirements to make a risk assessment successful, Question : (a) The ...

Question : (a) The garage manager of a motor vehicle mechanical repair workshop has decided to carry out a risk assessment to ensure compliance with the Occupational Safety an

Roles and responsibilities for risk management, Determine the roles and res...

Determine the roles and responsibilities for risk management at senior management level • The role and contents of the risk management strategy, including risk profile, risk app

Evaluate risk management models, Evaluate risk management models • ERM a...

Evaluate risk management models • ERM approach • ISO31000:2009 • M_O_R Framework • GRC Capability Model

Risk neutral approach, First's current stock price is $260. The price may r...

First's current stock price is $260. The price may rise to $300 or fall to $170 in one month. The risk-free interest rate is 18% per year. a. Using the replication portfolio app

Risks covered under the policy., An insurance company is investigating offe...

An insurance company is investigating offering kidnap and ransom insurance. Policies are to be sold to multinational companies to provide cover for certain named employees who are

Explain the term environmental management, Question: a) (i) Define and ...

Question: a) (i) Define and explain the term environmental management'. (ii) State three principles of sustainable development in relation to environmental sustainability.

Define the meaning of return, Define the meaning of Return Return is th...

Define the meaning of Return Return is the amount or rate of produce, profits, proceeds which accrues to an economic agent from an undertaking or investment. It's a reward for

How to gather and manipulate the data, Step 1: Stock Data: Choose four stoc...

Step 1: Stock Data: Choose four stocks, 2from the Dow Jones Industrial Average (DJIA 30) and 2other stocks of your choice.Download, import, or copy and paste the monthly price info

Display screen equipment risk assessment, Question 1: (a) Describe the ...

Question 1: (a) Describe the aspects that should be considered when assessing the fit between a person and his work. (b) Display Screen Equipment (DSE) risk assessment shoul

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd