Term
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Definition
| Systematic or nondiversifiable |
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Term
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Definition
| Diversifiable or nonsystematic |
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Term
| Covariance and the correlation coefficient |
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Definition
| provide a measure of the way returns two assets vary |
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Term
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Definition
| The smaller the correlation, the greater the risk reduction potential |
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Term
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Definition
| First step is to determine the risk-return opportunities available |
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Term
| Markowitz Portfolio Selection Model |
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Definition
Security Selection
We now search for the CAL with the highest reward-to-variability ratio |
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Term
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Definition
| portfolio choice problem may be separated into two independent tasks |
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Term
| Risk Pooling and the Insurance Principle |
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Definition
seems that selling more policies causes risk to fall
Flaw is similar to the idea that long-term stock investment is less risky |
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