0
portfolio risk
Wiki User
∙ 11y ago
Add your answer:
Earn +20 pts
What is the diversification of Risk?
Diversification of risk means reduction of risk. Merely reducing risk (and thereby reducing return proportionately) doesn't amount to diversification. Diversification in its true sense represents systematic reduction of risk in such a manner that return per unit of risk increases. By K S JOLLY
How does diversification affect financial institions credit risk exposure?
Generally, diversification helps reduce the overall credit risk exposure for financial institutions by reducing their overall expected chargeoff rates.
Why are mutual funds popular among investor?
Reduce risk, portfolio diversification, low transaction cost
When does 'concentration of credit risk' occur?
Credit concentration risk is a result of loan portfolio insufficient granularity (large single name exposures) or insufficient sectoral or regional diversification.
What is the main purpose of diversification?
Diversification is a technique that reduces risk by allocating investments among various financial instruments, industries and other categories. It aims to maximize return by investing in different areas that would each react differently to the same event. Most investment professionals agree that, although it does not guarantee against loss, diversification is the most important component of reaching long-range financial goals while minimizing risk.
What is the diversification of Risk?
Diversification of risk means reduction of risk. Merely reducing risk (and thereby reducing return proportionately) doesn't amount to diversification. Diversification in its true sense represents systematic reduction of risk in such a manner that return per unit of risk increases. By K S JOLLY
Diversification is an investment strategy to?
Diversification enables the investor to reduce risk by spreading investments among different companies and types of investing.
How does diversification affect financial institions credit risk exposure?
Generally, diversification helps reduce the overall credit risk exposure for financial institutions by reducing their overall expected chargeoff rates.
What are the advantages of risk variation?
Risk variation can be examined by analyzing the negative correlation between risk and return. When you say risk variation I am assuming that you are referring to the diversification of risk, or otherwise stated, the accumulation of various instruments which involve different (varrying) risk. The main advantage to diversification is overall risk reduction through decreasing volatility of any particular risk. Example: If your unemployed and looking for a job you would apply to multiple places rather than just one because applying to many jobs (rather than just one) reduces the risk that you will continue to stay unemployed.
What Diversification is an investment strategy to?
reduce risk by spreading investments among several assets.
What are the advantages of risks?
Risk variation can be examined by analyzing the negative correlation between risk and return. When you say risk variation I am assuming that you are referring to the diversification of risk, or otherwise stated, the accumulation of various instruments which involve different (varrying) risk. The main advantage to diversification is overall risk reduction through decreasing volatility of any particular risk. Example: If your unemployed and looking for a job you would apply to multiple places rather than just one because applying to many jobs (rather than just one) reduces the risk that you will continue to stay unemployed.
What are the characteristics of diversification?
Diversification involves spreading investments across different assets or securities to reduce risk. By investing in a variety of assets, such as stocks, bonds, and real estate, investors can minimize the impact of any single investment's performance on their overall portfolio. Diversification can help to increase potential returns while lowering overall risk.
Does Coca-Cola invest in new ventures?
it can invest in new ventures because to reduce the risk,by diversification
Why are mutual funds popular among investor?
Reduce risk, portfolio diversification, low transaction cost
What is lack of diversification?
Lack of diversification refers to an investment portfolio that is not spread out among different asset classes or securities. This increases the risk because the portfolio is more exposed to the performance of a single asset or market. Diversification helps to minimize the impact of market fluctuations on the overall portfolio.
What is diversification and why is it important?
Diversification is the practice of spreading investments across various asset classes to reduce risk. By diversifying, investors can protect themselves from the poor performance of a single investment or sector. It is important because it can help to minimize the impact of market fluctuations on a portfolio and improve overall risk-adjusted returns.
When does 'concentration of credit risk' occur?
Credit concentration risk is a result of loan portfolio insufficient granularity (large single name exposures) or insufficient sectoral or regional diversification.
