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3 years ago

Discuss how construction of a portfolio can lower the risk of an investor.

Business

1 answer:

Firdavs [7]3 years ago

7 0

Answer:

Simply put, the other meaning portfolio construction is diversification of risk. Portfolio construction is the one of simplest way of reducing risk without significantly affecting the returns.

Ways of diversifying risk includes Pension Funds, Mutual Fund, Equity, Stocks, Debt / Bonds, Retirement Saving, etc. If someone had made their investment in only one asset class, then there will be less returns available with high risk. while doing portfolio investment, it will give a systematic and controlled risky investment with higher return opportunities because some assets will perform well while other do poorly. but next year scenario could be changed or reversed. There are some thumb rules while doing portfolio investment, but it can be changed based on individual's personal goal.

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n a small open economy with perfect capital mobility, if the domestic interest rate were to rise above the world interest rate,

Brilliant_brown [7]

<u>A)</u><u> Capital inflow.</u>

<u />

<h3><u>The inflow of capital: What is it?</u></h3>

Net purchases of domestic assets by non-residents, or the difference between purchases and sells, are referred to as capital inflows. Net foreign asset purchases by domestic agents, excluding the central bank, equal net capital outflows. The total of foreign direct investment into the domestic economy, portfolio investment obligations, and other investment liabilities is known as capital inflows. Capital inflows to developing nations increased dramatically in the early 1990s. Direct and portfolio investments were sparked by interest in nations with developing financial markets. The influxes were welcomed since they gave investors more chances for international diversification and helped developing nations finance domestic projects.

Learn more about capital inflow with the help of the given link:

brainly.com/question/15702923?referrer=searchResults

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4 0

1 year ago

"I’m not sure we should lay out $250,000 for that automated welding machine," said Jim Alder, president of the Superior Equipmen

NikAS [45]

Answer:

The annual net cost savings promised by the automated welding machine

Annual Costs savings in replacing 6 welders $108,000

Reduced Material costs $6,500

Total annual Costs savings = $114,500

Note there is a $3,000 annual maintenance cost that will then be taken off this savings amount to make up the Annual Net cash inflow of $111,500

A. The Net Present value is $72,227. Kindly refer to the attached document for the clear presentation

B. The project should be accepted because it delivers a positive NPV. Meaning the net benefit outweighs the cost of owning the new Assets.

The Discounted net Cash flow for the 6 years (aside the initial outlay) is $402,227.

Annually this comes to $67,038.

The benefit the business gets in the switch to the automatic welders is approximately $67,038 annually.

7 0

3 years ago

In _______, data from transactions are collected over time and then processed all at once.

aivan3 [116]

The correct answer that fills in the blank is the real time data processing for it describes the statement above. The real time data processing includes of ongoing processes which is done in a short period of time that is why transactions that are collected are immediately and processed at once.

3 0

3 years ago

Environmental sustainability is ensuring that our natural resources can be used

Julli [10]

Answer:

The statement is: False.

Explanation:

Environmental sustainability refers to the set of efforts individuals and organizations make to use the natural resources an environment offers to satisfy people's needs while taking steps towards the conservation of those resources so they can be reused in the future. Environmental sustainability aims to avoid the indiscriminate exploitation of resources before some of them are extinct.

<em>The most common example of environmental sustainability is reforestation or planting trees every time they are cut down to diminish deforestation effects.</em>

6 0

3 years ago

Which best describes a central bank’s primary goals?

Pavlova-9 [17]

I think it’s either the last one or the first one sorry if I’m wrong

5 0

3 years ago