4
Risk and return I: Portfolios
- Two assets: Risk and return
- Two assets: Other concepts
- Three assets
- n assets
- The big picture
- Excel section
Most investors don’t put all their money in just one asset but in a portfolio of assets. This begs the question of how to estimate the risk and return of a portfolio, as opposed to those of an individual security, which is the issue we’ll discuss in this chapter. We’ll also discuss a few related concepts, such as feasible sets, efficient sets, and the minimum variance portfolio.
Two assets: Risk and return
Let’s kick off this discussion by considering the annual returns of AT&T and Bank of ...
Get The Financial Times Guide to Understanding Finance, 2nd Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
