There is always the risk, therefore, that a shareholder could receive nothing for their shares, and lose all of their money. Even a bondholder might receive something -- pennies on the dollar -- in the event of bankruptcy, but a stockholder receives nothing at all This risk is only mitigated through diversification (Damodaran, n.d). There is also the risk for any given stock that it drops below the purchase price and never recovers, so that the investor will need to take a loss in order to sell. This is also the case with mutual funds. While less risky because of their diversified nature, they still function like equities and there is no guarantee either of distributions or of capital gains to mutual fund holders. This is true even for holders of bond funds, something that should be remembered -- bond funds do not have the same risk profile as bonds.
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An investor with high risk tolerance should have a portfolio that is oriented towards equities. This is because in general equities earn higher returns, and if the investor can tolerate the risk of losing money on the investment, then higher returns should be sought. For some investors, 100% equity might be fine, depending on their age, income level and what the rest of their wealth holdings look like. For most clients, however, equities should be part of a balanced portfolio that includes some bonds as well in order to preserve at least some of the capital. Equities can be 80%, bonds 20%. Mutual...
A common thread through these fifteen stocks is that they not only represent diversification as a group, but most of the companies chosen also have a range diversification within the company's operations. The companies are spread around the world, and include a number of sectors. For example, within technology the portfolio has access to the health care sector through Cerner; within ADRs there is exposure to the Internet, chemicals and
However, it will depend upon the impact that rising prices will have on consumer spending and corporate balance sheets. Geopolitical tensions could have an impact upon the price of commodities most notably: oil and gold. As various uncertainties around the globe, could have an impact upon the availability of oil supplies, which will cause prices to increase. A good example of this can be seen with the different protests that
Investment and Portfolio Analysis With the increasing economic downturn in the economy, the need of investment has increased considerable. The potential investors generally foregoes their current leisure and earnings and investment their earnings and expect to earn benefits in future for the same. For analyzing the investment, we have taken into consideration a hypothetical investor who has $50,000 which needs to be invested in different, in different assets. Investment is one of the
Where, this strategy will help them to mirror the underlying amounts of volatility. Once this occurs, is when the risks have been reduced dramatically. As result, such a strategy can be used by international investors, to reduce their overall amounts of risk, while increasing their profits. Bibliography Artio International Equity. (2010). Retrieved June 19, 2010 from Yahoo Finance website: http://finance.yahoo.com/q/hl?s=JETAX+Holdings Artio International Equity. (2010). Retrieved June 19, 2010 from Yahoo Finance website:
Finance The portfolio I constructed consists of Google and Apple. The rationale for this seemingly simple portfolio is actually quite complex. The portfolio maximizes my long-run wealth, and this paper will explain how this will work. The bottom line for me is that no other portfolio was going to deliver the same benefits as a 50/50 portfolio of these two technology giants. Description of the Portfolio Portfolio theory holds that a diversified portfolio
29% 2.1 Man Group 12.56% 12.94% 2.34% 1.5 Marks & Spencer Group 4.60% 17.10% 8.33% 0.8 Meggitt 2.62% 65.59% 4.64% 1.0 Morrison (Wm) Supermarkets 3.66% 13.23% 7.00% 0.4 3.05% 69.65% 25.61% 0.6 Old Mutual 3.24% 26.38% 0.41% 1.5 Pearson 3.77% 50.96% 8.51% 0.8 Petrofac Ltd. 2.15% 62.80% 11.03% 1.5 Prudential 3.47% 14.73% 0.54% 1.6 Randgold Resources Ltd. 0.45% 20.71% 14.89% 0.4 Reckitt Benckiser Group 3.57% 0.00% 12.35% 0.6 Reed Elsevier 4.10% 54.47% 34.72% 0.8 Resolution Ltd. 8.21% 0.00% -0.05% 1.0 Rexam 3.43% 23.66% 6.14% 0.8 Rio Tinto 2.66% 15.32% 4.87% 1.7 Rolls-Royce Holdings 2.16% 33.86% 5.18% 2.1 RSA Insurance Group 8.88% 15.67% 1.89% 1.0 SABMiller 2.01% 23.13% 6.16% 1.0 Sage Group 3.39% 6.89% 0.9 Sainsbury (J) 5.00% 11.50% 5.61% 0.8 Schroders 2.68% 8.82% 2.27% 1.4 Schroders (Non-Voting) 3.45% 8.82% 2.27% 0.8 Severn Trent 4.18% 7.81% 3.56% 0.4 Smith & Nephew 1.81% 41.03% 12.26% 0.8 Smiths Group 3.52% 44.25% 10.58% 1.1 Standard Chartered 3.20% 13.15% 0.81% 1.3 Standard Life 6.25% 12.32% 0.19% 1.1 Tate & Lyle 3.44% 16.67% 5.34% 0.6 Tesco 4.49% 16.36% 5.62% 0.7 Tullow Oil 0.83% 30.01% 6.10% 1.3 United Utilities Group 5.05% 7.08% 4.91% 0.4 Vedanta Resources 2.79% 13.60% 2.67% 2.2 Vodafone Group 5.25% 13.41% 5.27% 0.4 Whitbread 2.44% 17.73% 8.01% 0.8 Wolseley 1.91% 14.80% 3.44% 1.3 WPP 2.93% 73.30% 3.34% 1.2 Optimal Portfolio After carefully analyzing the table 1 and calculating the financial measures of all stocks in Table 1, we select one high performing stock from every industry listed to have well diversified portfolio. Based on our
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