文档介绍：Chapter 19
Asset Allocation
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
19-*
Chapter Objectives
Explain how diversification among assets can reduce risk
Describe strategies that can be used to diversify among stocks
Explain asset allocation strategies
Identify factors that affect your asset allocation decisions
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
19-*
How Diversification Reduces Risk
Benefits of portfolio diversification
Asset allocation: the process of allocating money across financial assets with the objective of achieving a desired return while maintaining risk of a tolerable level
Building a portfolio
Portfolio: a set of multiple investments in different assets
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
19-*
How Diversification Reduces Risk (cont’d)
Focus on Ethics: The risk of insider trading
Insider information: information known by insiders (such as managers) of a firm, but not known by investors
Investors can legally only use information that is publicly available
Securities and Exchange Commission prosecutes violators
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
19-*
How Diversification Reduces Risk (cont’d)
Determining portfolio benefits
Compare return on the investments within the portfolio to the overall portfolio
Diversification reduces the exposure of your investments to the adverse effects of any individual investment
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
19-*
How Diversification Reduces Risk (cont’d)
Factors that influence diversification benefits
Volatility of each individual stock
Impact of correlations among stocks
Highly correlated stocks limit diversification
Consider stocks that are not influenced by the same conditions
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
19-*
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
19-*
How Diversification Reduces Risk (cont’d)