Risk Tolerance For A Portfolio

A) Calculate the weight of portfolio B, the expected portfolio return, and the portfolio standard

With Reference to this statement, describe, discuss and illustrate the principles of portfolio theory. Your essay should include coverage of the Markowitz Efficient Frontier and the Capital Market Line.

An investment philosophy is one’s approach to tolerance for risk in investments. It may be conservative which means you accept very little risk and are generally rewarded with relatively low rates of return. Another investment philosophy is moderate also known as risk indifference, this means one accepts some risk as they seek capital gains through slow and steady growth. Lastly, one may have an aggressive investment philosophy or be more of a risker seeker. Often times, people strive for a very high return by accepting a high level of risk. Going into the game, we were informed that like

4. If the slope of the line measuring a stock's historic returns against the market's historic

Portfolio Variance, of a portfolio with two stocks (Stock A and Stock B) is given by following formula:

|Company |Symbol |# of shares purchased |Total Value at Purchase ($) |Current Total Value ($) |Net + or - ($) |

4. The various weighted combinations of stocks that create this standard deviations constitute the set of efficient portfolios.

a portfolioA is dominated by another portfolio if it has a greater expected gain and a lesser risk than A. So, for those six assets in table1, the main reason which caused the discrepancies are the value of risks and returns.

The six stocks that I used to create my portfolio included Altera Corporation, Cabot Oil & Gas Corp., Dominion Resources, FMC Corporation, Chevron Corporation, and Nike Inc. Each of my stocks had weights, which I distributed for my $100,000. 20% of the $100,000 went towards Altera Corp., 15% to Cabot Oil $ Gas Corp., Dominion Resources, and Nike Inc. Finally I allocated 10% towards FMC Corp. and 25% towards Chevron Corporation. The stocks that I chose were intended to make my portfolio as diversified as possible so that I could receive high returns. I found that Dominion (D) Resources was the most steady and reliable

Risk appetite and risk tolerance are two often bandied about but poorly defined terms in risk management. I recently came across the following definitions that I really like. Risk appetite is the total amount of risk a business is prepared to tolerate in its business, a reflection of the business’ capacity to absorb risk, e.g., the amount you can lose at casinos over an entire year. Risk tolerance drills down one level into a company’s operations to reflect the risk of a particular business unit, e.g., the amount you are willing to lose during one day at a casino. Given these definitions, what is JPL’s

Asset allocation is when someone invests in a variety of places to reduce the overall risk of investing. Asset allocation is used for individuals to reduce their overall risk because only part of their money is tied up in each investment.

2. Portfolios are reported at market value. If market values are unavailable, investment is reported at cost.

In a diversified portfolio, in which risk is managed well, any losses that are incurred by certain assets will be offset in part by the gains of other assets. When risk is managed appropriately, hedge funds can be a robust addition to a portfolio.

A diverse portfolio means you may have money in savings accounts, commodities, futures, private businesses, etc. A less-safe portfolio may only have money in one area such as in a private business or in stocks. If you have a diverse portfolio on a macro level, then it means you can absorb loss and still come out on top.

3.investors construct portfolios via asset segregation, meaning that they tend to focus on an asset’s individual investment features versus its impact on the overall portfolio position