I know nothing except for the fact of my ...
Theory developed by Harry Browne in the 1980s, the theory stated that a portfolio of assets equally split between growth stocks, precious metals, government bonds and treasury-bills would be an ideal mixture for investors seeking safety and growth. The argument was that the portfolio would be ...
The investment strategy that is individualized based on factors such as: age, risk tolerance, investment goals, and horizon. The allocation falls into three main asset classes: equities, fixed-income, and cash/equivalents. Each asset class has a different level of risk and return. Allocation is ...
Real return is the percentage return realized for an investment, adjusted for factors such as inflation or other external effects. It is the expression of nominal rate of return in real terms, illustrating the purchasing power for the foreseeable future. EX: If your bank pays you 6% per year on ...
A model that describes the relationship between risk and expected return, used in the pricing of risky securities. The reason for CAPM is due to the investors need for compensation in 'time value of money' and 'risk'. Formula: Ra = Rf + βa(Rm - Rf) where: Ra is 'return of asset'; Rf is risk free ...
Also known as 'beta coefficient', beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and ...
A risk management technique that mixes a wide variety of investments within a portfolio. This mix helps a portfolio lower risk, because a portfolio of different investments, on average, yields higher returns and lower risk than investments in one investment. Diversification smooths out unsystematic ...
Index benchmarking allows the comparison between the performance of a portfolio(of assets) to that of the performance of an index within the market. This process helps determine whether you should readjust your portfolio, or ride it out. Benchmarking can be done over the term of 1 year, up to ...
The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Monetary policy is maintained through actions such as increasing the interest rate, or changing the amount of money banks ...
