11

Risk and return V: Portfolio optimization

In Chapter 4 we discussed how to calculate the risk and return of a portfolio. In this chapter we’ll discuss how to obtain optimal portfolios. More precisely, we’ll look into how to minimize risk; how to minimize risk for any desired level of return; how to maximize expected return for any desired level of risk; and how to maximize risk-adjusted returns. And we’ll discuss in detail how to implement all this in Excel. (Before reading this ...

Get The Financial Times Guide to Understanding Finance, 2nd Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.