2449 Words10 Pages

Table of Contents Page#
Abstract ------------------------------------------------------------------------------- 2
Markowitz Portfolio Theory -------------------------------------------------------- 3
2.1. Assumptions of Portfolio Theory ---------------------------------------------- 3
Alternative Measures of Risk -------------------------------------------------------- 4
3.1. Expected Rate of Return --------------------------------------------------------- 4
3.2. Variance (Standard Deviation) Of Returns for a Single Investment ------ 5
3.3. Variance (Standard Deviation) of Returns for a Portfolio ------------------- 5
3.3.1. Covariance -------------------------------------------------------------- 5
3.3.2. Correlation -------------------------------------------------------------- 6 3.4. Standard Deviation of a Portfolio ----------------------------------------------- 7
Efficient Frontier ----------------------------------------------------------------------- 10
Efficient Frontier and Investor Utility ----------------------------------------------- 10
Conclusion ------------------------------------------------------------------------------ 11
References ------------------------------------------------------------------------------ 12
Appendices ----------------------------------------------------------------------------- 13
Abstract
The portfolio model presented by Harry Markowitz derives the formula to calculate the expected rate of return for a

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