Академический Документы
Профессиональный Документы
Культура Документы
on
Return & Risk
Conducted By:
Kp = Σ WiKi Where,
i =1 W =Weight of individual
asset in total investment
n = No. of stocks in the port-
folio.
Example: If we invest 60 : 40 in assets A &
^
B respectively and the KB is 12% (assumed),
then,
^ ^ ^
KP = WAKA + WBKB
= .6 x .10 + .4 x .12
= .06 + .048
= .108 or, 10.8%
RISK
What it is?
It’s a hazard or exposure to loss or injury.
So, it refers to the chance that some
unfavorable event might occur.
Investment Risk:
Uncertainty to the variability of return
associated with a given asset i.e., the prob-
ability of actual return less than the expected
return i.e., the ↑ the chance of negative return,
the riskier is the investment.
RISK
(Contd.)
∂i =√90 = +9.5
↑ the ∂, ↑ the risk and vice versa.