Corporate Fin Mgt NDLM.PDF

Fig 5 Portfolio Choice with a Risk Free Security Portfolio of the risk-free and the risky investments, represented by point P, w ...

Fig. 6 Capital Market Line. Let us now examine the impact of introducing the risk-free security on the choice of portfolio by ou ...

become attractive once again and the analysts would have to recommend its inclusion in the portfolio M. hence we may say that po ...

individual securities. The theory asserts not only that such a relationship exists, but also that it has a very simple form whic ...

Fig 7 The Security Market Line. It is obvious that higher the value of beta, higher would be the risk of the security and theref ...

The Modern Portfolio Theory, therefore, defines the riskiness of a security as its vulnerability to market risk. This vulnerabil ...

The market return on any day is similarly defined as: Today’s index – Yesterday’s index Today’s market return = ---------------- ...

2 and 3 of Table 2 give the share price and the index respectively, for the period. The intermediate values have been omitted, s ...

TABLE 2: ITC Price & BSE Index Data Returns Date ITC Price BSE National Index ITC Index 1989 Jan 2 48.00 339.10 1989 Jan 4 4 ...

1990 Oct. 15 142.50 638.04 - 1.75% - 8.55% 1990 Oct. 18 142.50 655.11 0.00% 2.61% 1990 Oct. 22 135.00 615.25 - 5.56% - 6.48% 199 ...

assumed that a security can be completely represented in terms of its expected return and variance and that investors behave as ...

Material for Group C Asset Allocation and Portfolio Design (Source: Book on Portfolio Management by Professors. S.K.Barua, V.Rag ...

Strategic Asset Allocation Asset allocation is the process of distributing the total portfolio over the asset classes. At the st ...

deciding on the target beta and duration, let us first show how the overall portfolio beta and duration can be computed. The bet ...

might feel inclined to seek even higher returns by taking higher risk. In that case, we should choose a beta well above one. Nee ...

management costs would amount to Rs.17.5 crores. Suppose that the rate of interest is 18%. What is the target duration for this ...

The other way to achieve the target beta and duration is to adjust the composition of the portfolios within each asset class. Fo ...

portfolio selection. Even here separating the process of strategic asset allocation helps in providing a long-term perspective a ...

This ability may allow them to invest a smaller percentage of their total portfolio in equities and still earn their target rate ...

Example 4 Consider the asset allocation of Example 2. What happens to the overall beta and duration if there is a sharp rise in ...