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Portfolio management (risk and return) of inter-connected stock exchanges

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documents in English
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indian project
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47 pages
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  1. Introduction
    1. Scope of the study
    2. Objectives
    3. Limitations
    4. Description of the method
  2. Company profile
    1. Objectives
    2. Features
  3. Review of the literature
    1. Definition
    2. Participants
    3. Types and functions
  4. Trading
  5. Annexures
  6. Analysis
  7. Conclusions and suggestions
  8. Bibliography
  9. Appendices

Investment may be defined as an activity that commits funds in any financial form in the present with an expectation of receiving additional return in the future. The expectations bring with it a probability that the quantum of return may vary from a minimum to a maximum. This possibility of variation in the actual return is known as investment risk. Thus every investment involves a return and risk. Investment is an activity that is undertaken by those who have savings. Savings can be defined as the excess of income over expenditure. An investor earns/expects to earn additional monetary value from the mode of investment that could be in the form of financial assets. The three important characteristics of any financial asset are: Return-the potential return possible from an asset.
Risk-the variability in returns of the asset form the chances of its value going down/up.

[...] QUALITIES OF PORTFOLIO MANAGER: SOUND GENERAL KNOWLEDGE: Portfolio management is an exciting and challenging job. He has to work in an extremely uncertain and confliction environment. In the stock market every new piece of information affects the value of the securities of different industries in a different way. He must be able to judge and predict the effects of the information he gets. He must have sharp memory, alertness, fast intuition and self-confidence to arrive at quick decisions. ANALYTICAL ABILITY: He must have his own theory to arrive at the intrinsic value of the security. [...]


[...] PORTFOLIO ANALYSIS: Various groups of securities when held together behave in a different manner and give interest payments and dividends also, which are different to the analysis of individual securities. A combination of securities held together will give a beneficial result if they are grouped in a manner to secure higher return after taking into consideration the risk element. There are two approaches in construction of the portfolio of securities. They are Traditional approach Modern approach TRADITIONAL APPROACH: Traditional approach was based on the fact that risk could be measured on each individual security through the process of finding out the standard deviation and that security should be chosen where the deviation was the lowest. [...]


[...] If an investor is able to forecast these changes by developing a framework for the future through careful analysis of the behavior and movement of stock prices is in a position to make higher profit than if he was to simply buy securities and hold them through the process of diversification. Mechanical methods are adopted to earn better profit through proper timing. The investor uses formula plans to help him in making decisions for the future by exploiting the fluctuations in prices. [...]

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