Can someone give an example or scenario of the following: 1. Mean-Variance Analysis 2. Global minimum-variance portfolio 3. Capital allocation line (CAL) 4. Tangency Portfolio Then someone answered this, Im looking for the continuation. Thankyou :) “Since you have posted a question with multiple sub-parts, we will solve first three sub parts for you. To get remaining sub-part solved please repost the complete question and mention the sub-parts to be solved.” The process of evaluating a level of risk denoted as a variance, which an individual will encounter for a certain expected return is known as mean-variance analysis. Investors are concerned about mean-variance analysis for better decision making regarding investments.Explanation:Mean variance analysis: Mean variance method is used in the scenarios where stock deviates from mean position and variance can be computed over a standard deviation. Stocks in the particular portfolio can be correlated under mean variance analysis.Global minimum-variance portfolio: Global Mean Variance method is used is scenario wherein the financial instruments such as stock deviated against a mean value and have global historical records supporting the consideration whose variance can be determined over a duration.Capital allocation line (CAL): Capital allocation line method is utilized in scenarios where the portfolio has risky financial instruments as stocks, commodities, options, futures and derivative along with non risky financial instruments as bonds, fixed deposits and debt instruments.
Can someone give an example or scenario of the following:
1. Mean-
2. Global minimum-variance portfolio
3. Capital allocation line (CAL)
4. Tangency Portfolio
Then someone answered this, Im looking for the continuation. Thankyou :)
“Since you have posted a question with multiple sub-parts, we will solve first three sub parts for you. To get remaining sub-part solved please repost the complete question and mention the sub-parts to be solved.”
The process of evaluating a level of risk denoted as a variance, which an individual will encounter for a certain expected return is known as mean-variance analysis. Investors are concerned about mean-variance analysis for better decision making regarding investments.
Explanation:
Mean variance analysis: Mean variance method is used in the scenarios where stock deviates from mean position and variance can be computed over a standard deviation. Stocks in the particular portfolio can be correlated under mean variance analysis.
Global minimum-variance portfolio: Global Mean Variance method is used is scenario wherein the financial instruments such as stock deviated against a mean value and have global historical records supporting the consideration whose variance can be determined over a duration.
Capital allocation line (CAL): Capital allocation line method is utilized in scenarios where the portfolio has risky financial instruments as stocks, commodities, options, futures and derivative along with non risky financial instruments as bonds, fixed deposits and debt instruments.
Step by step
Solved in 2 steps
