Risk & Portfolio Management
3 terms
Alpha
Risk & Portfolio Management
%
The return earned above what an asset's risk exposure would have predicted.
Alpha = Actual Return - [Risk-Free Rate + Beta x (Market Return - Risk-Free Rate)]
Asset Allocation
Risk & Portfolio Management
%
The division of a portfolio between asset classes such as equity, debt, gold and cash.
Test: target weights are set per asset class and the portfolio is managed to those weights over time
Averaging Down
Risk & Portfolio Management
₹
Buying more of a holding after its price has fallen, reducing the average cost per unit.
New Average Cost = (Original Quantity x Original Price + New Quantity x New Price) / Total Quantity