How can individuals who manage their own portfolios reconcile some of the most useful aspects of traditional portfolio management and modern portfolio theory?
What will be an ideal response?
Answer: Students should include these key points:
Investors should carefully consider how much risk they are willing to bear when seeking higher returns.
They should diversify across industry lines, not necessarily limiting themselves to well-known or U.S. based companies.
While some aspects of modern portfolio theory might require mathematical training and computing power beyond the reach of most individual investors, they should pay attention to the betas of assets within their portfolio and their effect on the overall portfolio beta.
They should evaluate alternative portfolios and keep choices in line with their desired level of risk.
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A number of states have established special funds for compensating innocent accident victims who have exhausted all other means of recovery. These funds are called:
a) Joint underwriting association b) Unsatisfied judgment funds c) Reinsurance facilities d) Auto insurance plans
A property is listed for $210,000. The seller's loan balance of $100,000 is to be paid at closing. Closing cost are estimated at $2000 and the seller agrees to pay a 6% commission. If the property sells for $200,000, what will be the net proceeds to the seller?
A. $86,000. B. $92,000. C. $98,000. D. $100,000.