Chapter 6
Portfolios and Diversificat
Adair | Nofsinger, Foundations of Investments, 1 st Edition. © 2024 Cengage. All Rights Reserved. May not be scanne
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter Objectives, 1 of 2
By the end of this chapter, you should be able to:
• LO 6-1 Identify the relationship between securities that is
necessary to achieve diversification.
• LO 6-2 Compute the degree of comovement between risky a
returns.
• LO 6-3 Recognize the diversification potential between asse
classes.
• LO 6-4 Compute portfolio returns and risks.
• LO 6-5 Know why some portfolios dominate others.
Adair | Nofsinger, Foundations of Investments, 1 st Edition. © 2024 Cengage. All Rights Reserved. May not be scanne
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter Objectives, 2 of 2
• LO 6-6 Understand how creating a portfolio can reduce
diversifiable risk.
• LO 6-7 Recognize the minimum variance portfolio.
• LO 6-8 Contrast efficient and inefficient portfolios.
• LO 6-9 Assess the role of utility theory in selecting a portfol
• LO 6-10 Determine the optimal portfolio.
Adair | Nofsinger, Foundations of Investments, 1 st Edition. © 2024 Cengage. All Rights Reserved. May not be scanne
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Investment Portfolios
Portfolio is a combination of investment assets.
Can use theory, tools, and practice to find the “best”
portfolios.
Each investor then creates their own best portfolio tha
matches their risk tolerance and investment goals.
Adair | Nofsinger, Foundations of Investments, 1 st Edition. © 2024 Cengage. All Rights Reserved. May not be scanne
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Portfolios and Diversificat
Adair | Nofsinger, Foundations of Investments, 1 st Edition. © 2024 Cengage. All Rights Reserved. May not be scanne
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter Objectives, 1 of 2
By the end of this chapter, you should be able to:
• LO 6-1 Identify the relationship between securities that is
necessary to achieve diversification.
• LO 6-2 Compute the degree of comovement between risky a
returns.
• LO 6-3 Recognize the diversification potential between asse
classes.
• LO 6-4 Compute portfolio returns and risks.
• LO 6-5 Know why some portfolios dominate others.
Adair | Nofsinger, Foundations of Investments, 1 st Edition. © 2024 Cengage. All Rights Reserved. May not be scanne
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter Objectives, 2 of 2
• LO 6-6 Understand how creating a portfolio can reduce
diversifiable risk.
• LO 6-7 Recognize the minimum variance portfolio.
• LO 6-8 Contrast efficient and inefficient portfolios.
• LO 6-9 Assess the role of utility theory in selecting a portfol
• LO 6-10 Determine the optimal portfolio.
Adair | Nofsinger, Foundations of Investments, 1 st Edition. © 2024 Cengage. All Rights Reserved. May not be scanne
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Investment Portfolios
Portfolio is a combination of investment assets.
Can use theory, tools, and practice to find the “best”
portfolios.
Each investor then creates their own best portfolio tha
matches their risk tolerance and investment goals.
Adair | Nofsinger, Foundations of Investments, 1 st Edition. © 2024 Cengage. All Rights Reserved. May not be scanne
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
