Portfolio Analysis

David Kuo Chuen Lee, Joseph Lim, Kok Fai Phoon and Yu Wang

Chapter 36 in Finance for Fintech Professionals, 2022, pp 815-844 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This reading serves to give a summary of portfolios and their properties. Portfolios are generally less risky than single asset investments due to the diversification effect removing diversifiable risk. We then introduce the concept of risk aversion, in which investors with differing risk appetites have different utility functions. Next, we describe the Capital Allocation Line (“CAL”) and its derivation. We combine the above concepts to derive the optimal portfolio for investors. Finally, we conclude with an explanation and use of the Capital Asset Pricing Model (“CAPM”) and the Security Market Line (“SML”).

Keywords: Fintech; Finance; Economics; Financial Statement; Financial Statement Analysis; Portfolio Management; Financial Planning; Financial Management; Investment Management (search for similar items in EconPapers)
JEL-codes: G2 O33 (search for similar items in EconPapers)
Date: 2022
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