Risk aversion

Some of us may suggest investing the pension into stock. But I believe more that most of us will say No for such proposal because of its high risk. But don’t worry, you are not alone. In 1998, some NPC member had already give suggestions like this. The Prime Minister Zhu, he said NO to this suggestions because of the high risk in stock. We must keep safety first. So such proposal is killed at that time. If anyone who is interested in his speech, you could find out his idea in “Mr.Zhu’s

The plan of buying safe low beta stocks while shorting riskier high beta stocks has been shown to deliver significant risk-adjusted returns (Asness). It has been suggested that low risk investing brings high returns because of industry bets that favor a slowly changing set of heavy industries (Asness). The effect of management design on the portfolio performance of activity managed equity mutual funds increases when portfolios are focused in the top one or two stocks with each industry sector (Goldman)

stability and increase the sovereign-bank nexus, increasing borrowing costs and even in extreme cases leading to self-fulfilling debt crisis. (Adler, (2012); Acharya et. al. (2013)) Refinancing Risk Some studies show that a rising share of foreign investors in the investor base increases governments’ refinancing risk. In particular, foreign non-bank investors can be less stable source of funding for sovereigns because they can invest in broader pool of assets, thus can easily stop rolling over or can sell

To maximize the utility function, we used the formula: y*= [E(rP) – rf]/Aσ2P y*= (0.05317204-0.03)/(7*(0.100786)^2) = 32.58860806% So the investor will invest 32.58860806% of the investment budget in the risky asset and 67.41139194% in the risk-free asset. Cash: 67.41139194%*100,000 = $67,411.39 The investor allocation among the risky asset will be Equity: (0.526881735*32.58860806%) = 17.17034236% 17.17034236%*100,000 = $17,1703.42 Bonds: (0.473118265* 32.58860806%) = 15.4182657%

Markowitz was hardly the first to consider the desirability of diversification. Harry Max Markowitz - this is one of the founders of the theory of finance, the fastest growing economic sciences. This lays the foundation for the applied financial management in a company, using the tools and methods of investigation with a help of which any company can analyze its financial position, to assess the value of its capital and its structure, to select the best investment project and to manage it or to decide

These studies discussed above implicitly assume that the local and US investors have homogeneous expectations about future prospects of all markets. However, in practice, different market conditions can cause investors to generate differential risk perceptions. Some studies argue that investor sentiment may augment to the price divergence between ADRs and their underlying stocks.  Heterogeneous Investor Sentiment Grossmann et al. (2007) perhaps is the first to investigate the relationship between

Concept Explanation Mass production and customization used to be considered opposites and were considered to be opposite ends of a spectrum (Beaty, 1996). Mass customization allows that company to provide products meeting unique specifications while at the same time achieving a low manufacturing cost by using mass production technologies to provide one-of-a-kind products (Daft, 2013; Welborn, 2007; Pine & Gilmore, 1997). This idea has been around for over a decade, but just recently has technology

INTRODUCTION Generally, it is believed the net effect of the gains and losses involved with each choice are combined to present an overall evaluation of whether a choice is desirable. Scholars tend to use "utility" to state enjoyment and contend that we prefer instances that maximize our utility. However, studies have found that we don't actually process information in such a rational way. Kahneman and Tversky presented an idea called prospect theory in 1979, which contends that people value gains

their limitations. Stephen Ross once said: “To make a parrot into a learned financial economist it needs to learn just one word – arbitrage.” Under the Efficient Market Hypothesis, there should be no trading techniques that yield positive, expected, risk-adjusted excess returns (Dothan, 2008), which in turn suggests the absence of arbitrage opportunity. Sharpe and Alexander (1990) defined arbitrage as the act to buy and sell the equivalent, or fundamentally comparable, security in two different markets

even there’s a short peak of productivity, it often goes down soon. Like in experiment with gift and no-gift tasks held by Gneezy, effort and productivity increases for a short time, then it wanes quickly. What if investors trying to minimize their risks are giving very little funds, exactly as much as business support requires but not more? Experiments by Heyman & Ariely (2004) found that low monetary payment decreases effort relative to no payment. To my opinion, the key reasons of change in