Portfolio Returns & Risk-Adjusted Performance
Not what you're looking for?
Why should investors look beyond just portfolio returns when making investment decisions?
Which risk adjusted performance measure is preferred and why?
Please include specific details and at least 2 quality references
Purchase this Solution
Solution Summary
This solution provides a detailed discussion of the given finance questions.
Solution Preview
PORTFOLIO RETURNS AND MEASURES
Why should investors look beyond just portfolio returns when making investment decisions?
Maintaining a portfolio means investing in various forms and types of securities. This is a way by which an investor would be able to reduce the degree of risk for particular investments. It is also an application of diversification or of not putting all eggs in one basket.
Investments are made with an expectation of future returns. An investor evaluates all possible investment options or alternatives, weigh each option, then comes up with a decision depending on whether it meets expectations as to: required returns, payback, or safety of investment, etc.
Based on the Portfolio Theory, an investor must be concerned with both risk and returns. A basic goal is to achieve the highest return for a given level of risk.
Risk may be considered as the possibility of an unfavorable outcome. It may be measured by standard deviation or Beta. Risk therefore indicates the variability of returns of a given portfolio. The higher the degree of variability, the higher ...
Education
- Bachelor of Science in Business Administration, University of the Philippines
- Master in Business Administration, Saint Mary's University
- Doctor of Philosophy in Education, University of the Philippines
- Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
Recent Feedback
- "Excellent information thanks for the input"
- "Thank you"
- "Very thorough and informative. Thank you."
- "Good response. Very detailed"
- "This solution is excellent. Thank you"
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance
This quiz test introductory finance topics.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.