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Your investment goals: Your reasons for investing can be a great way to determine your risk tolerance. If your goal is just to increase your wealth, you might be able to handle riskier but ...
Your risk tolerance plays a crucial role in your game plan for growing your money.
With a risk-free asset, the straight capital allocation line is the efficient frontier. In modern portfolio theory, the efficient frontier (or portfolio frontier) is an investment portfolio which occupies the "efficient" parts of the risk–return spectrum. Formally, it is the set of portfolios which satisfy the condition that no other ...
Asset allocation. Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. [1] The focus is on the characteristics of the overall portfolio.
Merton's portfolio problem. Merton's portfolio problem is a problem in continuous-time finance and in particular intertemporal portfolio choice. An investor must choose how much to consume and must allocate their wealth between stocks and a risk-free asset so as to maximize expected utility.
Finance. Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. [1][2] Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent. [3][4]