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The Investment Decision Process

The Investment Decision Process

by Airen Farha -
Number of replies: 8

How should portfolio performance be measured? 

In reply to Airen Farha

Re: The Investment Decision Process

by Md. Atiqur Rahman Sumon -
The portfolio performance measured in three ways:
1. Treynor Measure: Jack L. Treynor was the first to provide investors with a composite measure of portfolio performance that also included risk. The objective of this was to find a performance measure that could apply to all investors regardless of their personal risk choices. Treynor suggested that there were really two components of risk:
a) The risk produced by fluctuations in the stock market, and
b) The risks arising from the fluctuations of individual securities.
2. Sharpe Ratio: The Sharpetfolio generates over its expected return. This measure of return is also known as alpha. and
3. Jensen Measure: The Jensen measure is calculated using the CAPM. The Jensen measure calculates the excess return that a portfolio generates over its expected return. This measure of return is also known as alpha.
In reply to Airen Farha

Re: The Investment Decision Process

by Morshed Uddin -
The portfolio performance measured in three ways:
1. Treynor Measure: Jack L. Treynor was the first to provide investors with a composite measure of portfolio performance that also included risk. The objective of this was to find a performance measure that could apply to all investors regardless of their personal risk choices. Treynor suggested that there were really two components of risk:
a) The risk produced by fluctuations in the stock market, and
b) The risks arising from the fluctuations of individual securities.
In reply to Airen Farha

Re: The Investment Decision Process

by Radika Tanzin Shithi -
The portfolio performance measured in three ways:
1. Treynor Measure: Jack L. Treynor was the first to provide investors with a composite measure of portfolio performance that also included risk. The objective of this was to find a performance measure that could apply to all investors regardless of their personal risk choices. Treynor suggested that there were really two components of risk:
a) The risk produced by fluctuations in the stock market, and
b) The risks arising from the fluctuations of individual securities.
2. Sharpe Ratio: The Sharpetfolio generates over its expected return. This measure of return is also known as alpha.
In reply to Radika Tanzin Shithi

Re: The Investment Decision Process

by Nurul Mohammad Zayed -
Good
In reply to Nurul Mohammad Zayed

Re: The Investment Decision Process

by Isse sudi mohamed -
when you want to make an investment its important for you to have a decision also this decision needs step by step or to have process that you want to flow in order to be come a successful investor and her some steps that is useful for you in your investment:
Step 1: Assess the Current Situation.
Step 2: Establish Investment Objectives.
Step 3: Determine Asset Allocation.
Step 4: Select Investment Options.
Step 5: Monitor, Measure and Rebalance.
In reply to Airen Farha

Re: The Investment Decision Process

by esmot ara -

Portfolio evaluating refers to the evaluation of the performance of the investment portfolio. It is essentially the process of comparing the return earned on a portfolio with the return earned on one or more other portfolio or on a benchmark portfolio.Portfolio performance evaluation essentially comprises of two functions, performance measurement and performance evaluation. Performance measurement is an accounting function which measures the return earned on a portfolio during the holding period or investment period. Performance evaluation, on the other hand, address such issues as whether the performance was superior or inferior, whether the performance was due to skill or luck etc.

For evaluation of portfolio, the investor shall keep in mind the secured average returns, average or below average as compared to the market situation. Selection of proper securities is the first requirement.

The portfolio performance measured in three ways:

1. Treynor Measure: 

Jack L. Treynor was the first to provide investors with a composite measure of portfolio performance that also included risk. The objective of this was to find a performance measure that could apply to all investors regardless of their personal risk choices. Treynor suggested that there were really two components of risk:

a) The risk produced by fluctuations in the stock market, and
b) The risks arising from the fluctuations of individual securities.

2. Sharpe Ratio: 

The Sharpetfolio generates over its expected return. This measure of return is also known as alpha. and

3. Jensen Measure: 

The Jensen measure is calculated using the CAPM. The Jensen measure calculates the excess return that a portfolio generates over its expected return. This measure of return is also known as alpha.