Discuss the measurement of risk contribution. What strategies can be taken to mitigate risk in market portfolios?
When we deal with risk in an investment context, we're dealing with the amount of risk according to what is acceptable to the individual or firm, given their risk acceptance level, which is also called their risk appetite. When companies have a high risk appetite, they are willing to accept a higher amount of risk based on their investment portfolio. When it is low, they're only willing to accept a ...
This solution discusses the measurement of risk contribution. I also discuss specific strategies that can be used to mitigate risk in market portfolios.