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Risk management-portfolio approach and insurance

Explain the portfolio approach to risk management.
Explain the use of insurance in managing risk.

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Question
Risk management
Explain the portfolio approach to risk management.
Explain the use of insurance in managing risk.

Answer

Portfolio approach to risk management

A portfolio is simply a combination of investments. The portfolio approach to risk management states that a rational decision maker should not invest all of his monies in one security instead he should make a combination of securities with different risks and returns so that if one security is going down, the loss ...

Solution Summary

-Portfolio approach to risk management
-Use of insurance in managing risk

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