Published on June 13, 2016
1. Welcome to Our Presentation
2. Md. Ridwan Reza Senior Lecturer Department of Business Administration Leading university, Sylhet Prepared for
3. Sultan Islam- 1201010182 Syed Aminur Rahman- 1201010331 Md.Shahriar Chowdhury- 1201010136 Masuda Akther Jagirder - 1201010044 Rafiqul Bari Rahad - 1201010145 Prepared By
4. Diversification Principle of Diversification “when securities are combined into a portfolio, the resulting portfolio will have a lower level of risk than a simple average of the risks of the securities.” Simply diversification means you don't put all your eggs in one basket. Diversification is a way to try to reduce the risk of your portfolio by choosing a mix of investments
5. Why do Investors Construct Portfolios ? To reduce risk Portfolio risk depends on the covariance or correlation coefficient between two securities. low correlated securities reduce portfolio risk significantly If r = -1, portfolio risk reduces nearly zero
6. Market Model The return of any security The total risk of securities by taking variance: Portfolio Return By substituting ri
7. The total risk of portfolio by taking variance: Note that, assumed to be uncorrelated. Thus,
... the presence of more assets in a portfolio leads to greater diversification ... beta risk and market risk. ... diversification to risk reduction ...
Investing 101: How Diversification Reduces Risk. ... I would also submit that what has happened to the market ... and dollar cost averaging ...
... generally leads to risk reduction ... market risk of security i = the unique ... Risk diversification leads to an averaging of ...
... Risk reduction and real estate ... market rather than the unique or ... On the Process of Risk Reduction through Diversification, ...
... Geographic market diversification: A premium or discount ... market diversification ... the market expansion facilitates risk-reduction ...
Definition of diversification. ... Magic of diversification. The effective reduction of risk ... Also known as market risk. Unique risk.
... impact of the geographic expansion of a ... expected reduction in risk from a one ... diversification leads to lower risk and the ...
... RISK, AND MAXIMAL GAINS FROM DIVERSIFICATION ... all the gains from diversification come from “averaging over ... This market price of dollar risk, ...
and all such portfolios will plot on a straight ... with the extent of risk reduction ... provides no risk reduction, only risk-averaging; the ...