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What is best measure of risk for an asset held in isolation and which is the best measure for an asset held in a diversified portfolio?
Wiki User
∙ 13y ago
Standard deviation; correlation coefficient
Wiki User
∙ 13y ago
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What is the best measure of risk for an asset held in a well-diversified portfolio?
The measure of risk for an asset in a diversified portfolio is greatly dependent on the type of asset it is. And to narrow it down further, the name of the asset is vital to a complete answer. The best answer on the information provided is what percentage of the portfolio does the asset comprise of the portfolio.
What is the symbol for First Trust International Multi-Asset Diversified Income Index in NASDAQ?
The symbol for First Trust International Multi-Asset Diversified Income Index in NASDAQ is: YDIV.
What does it mean to diversify a portfolio?
Having a number of different asset classes in the portfolio. Asset classes include stocks, bonds, currencies, commodities and cash equivalents.
When Maturity GAP is positive?
Maturity of asset in portfolio is larger than the maturity of liabilities in the portfolio
You form a portfolio by investing equally in A beta0.8 B beta1.2 the risk-free asset and the market portfolio What is your portfolio beta?
The portfolio consists of four stock: A, B, risk-free asset and the market. The weights will be 0.25 each and the portfolio beta = (0.25 x 0.8) + (0.25 x 1.2) + (0.25 x 0) + (0.25 x1) = 0.75 Akshita Mehta
What is the best measure of risk for an asset held in a well-diversified portfolio?
The measure of risk for an asset in a diversified portfolio is greatly dependent on the type of asset it is. And to narrow it down further, the name of the asset is vital to a complete answer. The best answer on the information provided is what percentage of the portfolio does the asset comprise of the portfolio.
Which is the best measure for an asset held in a diversified portfolio?
beta
How do you measure the risk of a single asset?
The total risk of a single asset is measured by the standard deviation of return on asset. Standard deviation is the square root of variance. To measure variance, you must have some distribution/ possibility of asset returns. However, the relevant risk of a single asset is the systematic risk, not the total risk. Systematic risk is the risk that cannot be diversified away in a portfolio. Systematic risk of an asset is measured by the Beta. Beta can be found using Regression (between market return and asset's return) or Covariance formula.
Security A has an expected return of 7 percent?
Security A is less risky if held in a diversified portfolio because of its negative correlation with other stocks. In a single-asset portfolio, Security A would be more risky because sA> sBand CVA > CVB.
What is the symbol for First Trust International Multi-Asset Diversified Income Index in NASDAQ?
The symbol for First Trust International Multi-Asset Diversified Income Index in NASDAQ is: YDIV.
What is the symbol for First Trust Exchange-Traded Fund VI Multi-Asset Diversified In in NASDAQ?
The symbol for First Trust Exchange-Traded Fund VI Multi-Asset Diversified In in NASDAQ is: MDIV.
What does it mean to diversify a portfolio?
Having a number of different asset classes in the portfolio. Asset classes include stocks, bonds, currencies, commodities and cash equivalents.
When Maturity GAP is positive?
Maturity of asset in portfolio is larger than the maturity of liabilities in the portfolio
How do you calculate risk on a two asset portfolio?
For a two-asset portfolio, the risk of the portfolio, σp, is: 2222p1122112212222p11221212121212σ=wσ+wσ+2wσwσρorσ=wσ+wσ+2wwcovcov since ρ=σσ where σi is the standard deviation of asset i's returns, ρ12 is the correlation between the returns of asset 1 and 2, and cov12 is the covariance between the returns of asset 1 and 2. Problem What is the portfolio standard deviation for a two-asset portfolio comprised of the following two assets if the correlation of their returns is 0.5? Asset A Asset B Expected return 10% 20% Standard deviation of expected returns 5% 20% Amount invested $40,000 $60,000
How do you calculate risk on a two-asset portfolio?
For a two-asset portfolio, the risk of the portfolio, σp, is: 2222p1122112212222p11221212121212σ=wσ+wσ+2wσwσρorσ=wσ+wσ+2wwcovcov since ρ=σσ where σi is the standard deviation of asset i's returns, ρ12 is the correlation between the returns of asset 1 and 2, and cov12 is the covariance between the returns of asset 1 and 2. Problem What is the portfolio standard deviation for a two-asset portfolio comprised of the following two assets if the correlation of their returns is 0.5? Asset A Asset B Expected return 10% 20% Standard deviation of expected returns 5% 20% Amount invested $40,000 $60,000
What is the market cap for First Trust International Multi Asset Diversified Income Index YDIV?
As of July 2014, the market cap for First Trust International Multi-Asset Diversified Income Index (YDIV) is $10,845,043.38.
What is the market cap for First Trust Exchange Traded Fund VI Multi Asset Diversified In MDIV?
As of July 2014, the market cap for First Trust Exchange-Traded Fund VI Multi-Asset Diversified In (MDIV) is $730,950,044.30.
