What is Efficient Market Theory? According to Louis Bachelier, a French mathematician, “an efficient market is the one where the market price is an unbiased estimate of the true value…

Evaluation of Portfolio Performance The rate of return of a portfolio is measured as the sum of cash received (dividend) and the change in the portfolio’s market value (capital gain…

What is Technical Analysis? Technical analysis is a method used in financial markets, primarily for analyzing and forecasting the future price movements of various assets, such as stocks, currencies, commodities,…

What is Fundamental Analysis? Fundamental analysis is an analytical and methodical approach to measure the future dividends and share price. In simple words, fundamental analysis can be categorised as the…

Markowitz Model A Nobel Memorial Prize winning economist, Harry Markowitz devised the modern portfolio theory in 1952. Markowitz’s hypothesis emphasised the relevance of portfolios, risk, the correlations between securities and…

Risk-Return Trade-Off Risk and return are two of the most important concepts that investors are interested in. Return refers to the financial gain that can be received from an investment.…

Portfolio Risk and Return Analysis The expected return of a portfolio is computed by taking the weighted average of the expected return of the stocks in the portfolio. As the…

Diversification of Risk Naturally, any investor would like to receive the highest possible return from a given risk level that he/she is wants to take. Now the question is how…

Stock Market Indices A stock index is a numeric value that is used to indicate the value of a particular portion or segment of the stock market. It is computed…

What is Return on Investment (ROI)? Return on investment, or ROI, is an indicator of profitability. In accounting terms, ROI, is found by dividing the net profit by the total…