Portfolio Management: Asset Allocation and Portfolio Review

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Portfolio Management: Asset Allocation and Portfolio Review Research and Trade #4 Portfolio Management: Asset Allocation and Portfolio Review

Stock Pitch and Think-or-Swim Teams of 1 – 4 people Presentations and sign ups due on October 31st Presentations on November 6th Additional information will be in this weekend’s newsletter tdameritradeu.com Code: Fall201PaperOmega88 Start with $30,000 Begins 10/22/2018

Diversification Review What it is: a form a risk management How it is used: it uses many securities to reduce risk Measures: Beta: Covar(R[a],R[I])/Var(R[I]); risk v market Sharpe Ratio: (E[a]-Rf)/Sd[a]; measures efficiency, higher is better Upside: amount above v below; want 100%+ compared to benchmark

What is Asset Allocation? The way you diversify Optimize Risk v Reward Accomplish goals Risk Profile Time Span

How to Determine a Good Allocation Age: Fixed income v equity, younger v older Goals: What is being saved for? What is it’s price? Term: How far away are the goals? Commitment: How much time will be spend monitoring investments? Risk Tolerance: How much are you willing to risk?

Reasons for Review Different performance among investments Change in Risk/Quality Change in Goals Poor/Good Performance Change in Risk Tolerance/Attitudes

Rebalancing Changing a portfolio to meet target Sell high performing Buy low performing Change to a new allocation

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