Thus far in this chapter, we have concentrated on individual assets considered separately. However, most investors actually hold a portfolio of assets. All we mean by this is that investors tend to own more than just a single stock, bond, or other asset. Given that this is so, portfolio return and portfolio risk are of obvious relevance. Accordingly, we now discuss portfolio expected returns and variances.


A group of assets such as stocks and bonds held by an investor.

portfolio weight

A percentage of a portfolio's total value that is in a particular asset.

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