1 II. The Two Security Case and The Case of Multiple Assets
2 Can calculate from past data For future can only estimate with uncertainty How Proceed Simple Example Develop Equations of Portfolio Analysis Return
3 Return R 1 Probability How Summarize
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9 RP.0.01E(R) = =
10 DERIVATION OF PORTFOLIO CHARACTERIESTICS 2 SECURTITIES R p = X A R A + X B R B 1.E(R p ) = X A E (R A ) + X B E (R B ) 2. 3.
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12 THREE QUALITIES THAT ARE IMPORTANT 1.EXPECTED RETURN 2.STANDARD DEVIATION 3.CORRELATION
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14 More than two securities 1. 2.
OR Basis of every product and insight in portfolio management since Markowitz.