Lecture 12 Portfolio Opportunities and Choice refer to chapter 12 THE COURSE OF FINANCE 2017 SPRING SJTU
Lecture 12 Portfolio Opportunities and Choice refer to chapter 12 THE COURSE OF FINANCE 2017 SPRING SJTU 1
Chapter 12 Contents 12.1 The process of personal portfolio selection 12.2 The trade-off between expected return and risk 12.3 Efficient diversification with many risky assets THE COURSE OF FINANCE 2017 SPRING SJTU 2
Chapter 12 Contents 12.1 The process of personal portfolio selection 12.2 The trade-off between expected return and risk 12.3 Efficient diversification with many risky assets THE COURSE OF FINANCE 2017 SPRING SJTU 2
Objectives To understand the process of personal portfolio selection in theory and practice THE COURSE OF FINANCE 2017 SPRING SJTU 3
Objectives To understand the process of personal portfolio selection in theory and practice THE COURSE OF FINANCE 2017 SPRING SJTU 3
Introduction How should you invest your wealth optimally? Portfolio selection Portfolio selection is the study of how people should invest their wealth;it is also a process of trading off risk expected return to find the best portfolio of assets liabilities Your wealth portfolio contains Narrower dfn:consider only securities Ex.stocks, bonds Wider dfn:house purchase,insurance,debt Broad dfn:human capital,education THE COURSE OF FINANCE 2017 SPRING SJTU 4
Introduction How should you invest your wealth optimally? Portfolio selection Portfolio selection is the study of how people should invest their wealth; it is also a process of trading off risk & expected return to find the best portfolio of assets & liabilities Your wealth portfolio contains Narrower dfn: consider only securities Ex.stocks, bonds Wider dfn: house purchase, insurance, debt Broad dfn: human capital, education THE COURSE OF FINANCE 2017 SPRING SJTU 4
12.1Portfolio Selection Strategy There are general principles to guide you,but the implementation will depend on your personal circumstances >The life cycle Time horizon Risk attitude Role of professional asset managers THE COURSE OF FINANCE 2017 SPRING SJTU 5
12.1Portfolio Selection Strategy There are general principles to guide you, but the implementation will depend on your personal circumstances The life cycle Time horizon Risk attitude Role of professional asset managers THE COURSE OF FINANCE 2017 SPRING SJTU 5