Topic: Financial Markets

Diversification and the Market Portfolio

– February 28, 2011

Diversification and the Market Portfolio This is the second in a ten-part series exploring the implications of modern portfolio theory (MPT) for common investment decisions faced by individuals. This part focuses on two major concepts: diversification …

Financial Markets

Managing a Portfolio’s Risk

– February 28, 2011

Managing a Portfolio’s Risk Using a four-step plan, you can select a portfolio allocation that generates the desired risk exposure. The more volatility (risk) you can take on, the higher your expected long-term returns. by Donald R. Chambers

Financial Markets

The Asset Allocation Decision

– February 28, 2011

The Asset Allocation Decision Investment choices should be based on realistic forecasts of the risk-return trade-off and the investor’s personal preferences about how much risk to undertake. by Donald R. Chambers

Financial Markets

Insurance and Risk in MPT

– February 28, 2011

Insurance and Risk in MPT While there are limits on how fully investors can diversify the market portfolio, in practice insurance pools risk so that everyone can enjoy substantial diversification. by Donald R. Chambers, PhD, Research Associate