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Model of Static Portfolio Choices

Madalina Gabriela Anghel, Gyorgy Bodo and Okwiet Bartek
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Madalina Gabriela Anghel: Bucharest University of Economic Studies
Gyorgy Bodo: Bucharest University of Economic Studies
Okwiet Bartek: Czestochowa University of Technology

Romanian Statistical Review Supplement, 2016, vol. 64, issue 1, 49-53

Abstract: In decentralised economies the financial markets has a key role, being considered as institutions that transfer entrepreneurial risk to consumers. The entrepreneurial risk is assumed by the investors as part of the industrial or infrastructure investment that could be considered as the engine of the economic growth. The risk related to the investments finally is transferred from the investors to the tax paying population which statistically can be considered as risk-averse. The problem of the investors is to determine the optimum balance between the assumed risk and the expected performance, but having a limited investment capital. In this paper we examined a simple version of the problem convincing risk-averse people to accept the purchase of risky assets by receiving an additional premium on it. Also, we focus on behaviour of investors who spend the entire investment at the end of the analysed period, but for simplicity we detach the time component of the equation.

Keywords: portfolio; asset; choice; model; risk (search for similar items in EconPapers)
Date: 2016
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