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"In finance, risk is best judged in a portfolio context." Is this true? Why?
Finance & Accounting
Pages 6 (1506 words)
“In finance, risk is best judged in a portfolio context" Is this true? Why? Table of Contents Introduction 3 Risk and Return 3 Portfolio Theory 4 The CAPM (Capital Asset Prising Model) 5 Dividend Policy 5 Long Term Financing 6 Capital Structure (Irrelevance) 6 Capital Structure (and Market Perfection) 7 The weighted average cost of capital (W.A.C.C.) 7 Option (Financial) 7 Option (Real) 7 Risk in Portfolio Context 8 References 10 Introduction The investment market is inextricably linked to the securities market of the country; and the understanding of the stock markets is a must for the successful management of the portfolios.
The giant players of this sector, the business are generated by management of the funds of the High Net-worth Individuals [HNI] clients and the big Corporate Houses. The services are obviously for a pre-determined fee which is generally structured on the basis of the returns generated by the investment bankers. In most common cases, there is a fixed portion of fee as well irrespective of the return generated by the fund managers (View, 2007 p.144). In this essay the researcher will analysis different aspects of portfolio. The theoretical background of portfolio especially risks and return is the integral part of portfolio discussion. So, here the researcher discusses this part at the first part of the essay. After that the researcher will discusses different aspects related with the portfolio i.e. CAPM Model, Long term financing, capital structure, WACC model, dividend policy and option. ...
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