Fundamentals of Investment - Module IV
Fundamentals of Investment - Module IV
Fundamentals of Investment - Module IV
Markowitz model
Harry Markowitz put forward this model in 1952.
It assist in selection of most efficient portfolio of the given securities.
This model shows investors how to reduce their risk.
This model is also called mean variance model.
Assumptions of Markowitz theory
Returns from all the assets are distributed normally.
The investor is rational.
All investors have the access to the same information.
All the investors having the same view on rate of return expected.
Unlimited capital at the risk free rate of return can be borrowed.
Investors will give their best to maximize return.
JUBAIR MAJEED