The Portfilio Theory

Part A Portfolio Theory Overview Portfolio Theory In 1952, Marco Witz proposed a portfolio theory. This theory has proven to be effective in the securities markets of developed countries, and it is widely used for portfolio selection and asset allocation. "In other words, a portfolio means using a variety of financial products, such as stocks, bonds, funds, and other portfolios.

Risk of Portfilio = 0.88% The result of this analysis is very interesting. Keep in mind that putting two investments in one portfolio will significantly reduce the risk of each investment. This is one of the merits of diversification by portfolio structure. For the time being, do not worry! In the next article, I will explain these effects in detail

Under the general name of contemporary portfolio theory announced entitled "Portfolio Selection" by Dr. Harry Markowitz in 1952, science has developed with focus on market and financial risk management. In modern portfolio theory, the variance (or standard deviation) of the portfolio is used as the risk definition. Credit risk, also called default risk, is the risk associated with the default of the borrower (not paid as promised). Investor loss includes loss of principal and interest, a decrease in cash flow, and an increase in collection expenses. Investors can also undertake credit risk by using leverage directly or indirectly. For example, investors can purchase investments using margins. Alternatively, the investment can be used directly or indirectly, or it depends on a repurchase, a forward commitment or a derivative

Modern portfolio theory provides the best evaluation on how to allocate investment assets. In other words, if the investment risk increases, the theory that investors can expect a higher return will be established. Conversely, lower risk means lower returns. Therefore, in order to protect investors from major losses, it is prudent to expand their investment to include high risk assets and high risk assets. You can invest in apartment buildings, commercial real estate, real estate investment trusts, office buildings, industrial real estate, rental housing and rehabilitation programs. Some of your real estate investments may be actual real estate you develop, but other real estate investments may be simply funds or online market investment. In other words, I want you