AFM121 Chapter Notes - Chapter 15: Weighted Arithmetic Mean, Canadian Imperial Bank Of Commerce, Market Timing

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM121
• Professor: Craig Geoffrey

Document Summary

Chapter 15 introduction to the portfolio approach. Portfolio management focuses on risk and return: considers securities based on their contribution to the risks and expected returns of the entire portfolio. Financial decisions revolve around the risk-return trade-of: reducing risk should reduce returns (and vice-versa) Investors will prefer an investment that generates the greatest return for a given level of risk (risk averse: require additional expected return in return for assuming additional risk) Investors will attempt to either: minimize risk for a given level of required return, max expected return for a given level of risk. Investors who are very risk-averse will own very safe assets (low tolerance for risk): gics, canada savings bonds (low risk, low return assets) Investors who prefer greater risk will own riskier assets: riskier stocks: tesla, amazon, google (less risk / less return) treasury bills bonds debentures . Preferred shares common shares derivatives (greater risk /