Archive | Theories

Random Walk Hypothesis: Assumptions and Tests | Financial Economics

In this article we will discuss about:- 1. Introduction to Random Walk Hypothesis 2. Random Walk Assumptions 3. Schematic Presentation 4. Test 5. Essence 6. Limitations. Introduction to Random Walk Hypothesis: There are theoretically three approaches to market valuation, namely, efficient market hypothesis, fundamental analysis and technical analysis. Under fundamental analysis, the share value depends on the intrinsic worth of [...]

By |2017-12-15T11:15:53+05:30December 15, 2017|Theories|Comments Off on Random Walk Hypothesis: Assumptions and Tests | Financial Economics
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Sharpe Theory of Portfolio Management | Financial Economics

Markowitz Model had serious practical limitations due to the rigours involved in compiling the expected returns, standard deviation, variance, covariance of each security to every other security in the portfolio. Sharpe Model has simplified this process by relating the return in a security to a single Market index. Firstly, this will theoretically reflect all well traded securities in the market. [...]

By |2017-12-15T11:15:53+05:30December 15, 2017|Theories|Comments Off on Sharpe Theory of Portfolio Management | Financial Economics
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Modern Portfolio Theory: Basis and Strategies | Financial Economics

In this article we will discuss about:- 1. Meaning of Modern Portfolio Theory (MPT) 2. Basis of Modern Portfolio Theory (MPT) 3. Strategies 4. Mathematical Models. Meaning of Modern Portfolio Theory (MPT): MPT Postulates those savers are generally risk averse and try to reduce risk by all possible methods. The markets are perfect and absorb all information perfectly and returns [...]

By |2017-12-15T11:15:53+05:30December 15, 2017|Theories|Comments Off on Modern Portfolio Theory: Basis and Strategies | Financial Economics
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