PPT-Chapter 11 Optimal Portfolio Choice and the Capital Asset Pricing Model

Chapter Outline 111 The Expected Return of a Portfolio 112 The Volatility of a TwoStock Portfolio 113 The Volatility of a Large Portfolio 114 Risk Versus Return Choosing an Efficient Portfolio. And 57375en 57375ere Were None meets the standard for Range of Reading and Level of Text Complexity for grade 8 Its structure pacing and universal appeal make it an appropriate reading choice for reluctant readers 57375e book also o57373ers students This module covers the relationships between price and quantity. , elastic demand, inelastic demand, and optimal price under conditions of constant elasticity.. Authors: Paul Farris and Phil Pfeifer. P.V. . Viswanath. For a First Course in . INvestments. Learning Goals. 2. How do we characterize individuals’ preferences for taking risk?. How do we use utility functions over asset returns?. How do we evaluate investors’ risk preferences?. P.V. . Viswanath. A different perspective on the CAPM. We saw earlier why, intuitively, the CAPM should describe required returns.. We will see, in this chapter, the connection between the CAPM and individual investors’ construction of optimal portfolios.. Diversification is key to risk management. Asset allocation most important single decision. Using Markowitz Principles. Step 1: Identify optimal risk-return combinations using the Markowitz analysis . Ken . Shaw. Envestnet. | PMC. Paul Brennan. First Quadrant. Rob Croce. Salient Partners. Dan Villalon. AQR. First an introduction. What is Risk Parity. . How does Risk Parity work. . Where does Risk Parity fit in a portfolio. I. . Efficient Market. Theory (EMT). Efficient Market Theory. Where did EMT come from?. What is the Efficient Market Theory?. What does it Imply?. How can it be tested?. What conclusions can we draw about market efficiency?. Market Skimming. Market Skimming. High price, Low volumes. Skim the profit from the market. Suitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out). ?. Pricing . is a marketing function in which both a buyer . and. a seller . perceive the . most favorable value . for a good or service. 2. Price– You get what you pay for…. What does that phrase mean to you?. Bodie, Kane and Marcus. Essentials of Investments . 9. th. Global Edition. . 7. 7.1 The Capital Asset Pricing Model.  . 7.1 The Capital Asset Pricing Model. Assumptions. Markets are competitive, equally profitable. Asset tracking is important for everyone. If you can monitor your assets then you
can do better financial planning. Because it helps in budgeting. Now no need for
costly asset tracking software or asset management software to track assets. By
using this app you can monitor all your assets. Asset Classification. Capital Assets. Cost greater than $5,000. Use an expense account code 63xxx. Minor Equipment. Cost greater than $1,000 but less than $5,000. Use expense account code 62238. Sensitive Equipment. P.V. . Viswanath. For a First Course in . INvestments. Learning Goals. 2. What are the assumptions of the CAPM?. What are the implications of the CAPM?. What happens if we relax the assumptions of the CAPM?. Titing. , Cui Michael L. Hamilton. Segmented Pricing. A. . segmented pricing . is . when the price for a good varies across different segments of the market. .. Many markets are segmented. Digital Properties like Adobe, Office, Online Games.