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Portfolio Diversification All that should matter to an investor is the performance of the entire portfolio. Mean and variance of portfolio matter Law of large numbers means that spreading over many independent assets reduces risk, has no effect on expected return.

28 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 636 | Lượt tải: 0

Fundamental Insurance Principles and Issues Risk Pooling is the source of all value in insurance Moral Hazard dealt with partially by deductions and co-insurance Selection bias dealt with by group policies, by testing and referrals, and by mandatory government insurance

17 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 527 | Lượt tải: 0

Change and Information Technology • Financial markets have shown rapid change in the past • Information technology is an important factor in the change, and portends important changes in the future • Other changes are due to simple invention, and slow public acceptance of new information

31 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 528 | Lượt tải: 0

Probability and Insurance Concept of probability began in 1660s Concept of probability grew from interest in gambling. Mahabarata story (ca. 400 AD) of Nala and Rtuparna, suggests some probability theory was understood in India then. Fire of London 1666 and Insurance

18 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 705 | Lượt tải: 0

Financial and Insurance as Powerful Forces in Our Economy and Society This course seeks to understand the full role of advanced risk management in our economy and society Finance, insurance, some public finance

37 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 588 | Lượt tải: 1

A variety of tax-sheltered opportunities are available for building retirement assets. Tax Sheltering – tax laws allow certain income to remain exempt from income taxes or permit an adjustment, reduction, deferral, or elimination of income tax liability. Retirement – time in life when most of one’s income changes from earned income to employer-ba...

30 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 627 | Lượt tải: 0

Mutual Fund = an investment vehicle offered by investment companies to those who wish to: Pool money Buy stocks, bonds, and other financial securities Have buy/sell decisions made by fund manager Many mutual funds chosen for inclusion in retirement account investments (e.g., 401(k)s)

28 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 510 | Lượt tải: 0

Stocks – shares of ownership in the assets and earnings of a business corporation. Common Stock – the most basic form of ownership of a corporation. Shareholder – the owner of a stock. Voting Rights – proportionate authority to express a choice in matters affecting the company. Proxy – written authorization given by shareholder to someone else ...

24 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 524 | Lượt tải: 0

People who invest very conservatively They do not get ahead financially over the long term because taxes and inflation offset most of their interest earnings Remember “The Rule of 72”? 72/4% = 18 years 72/8% = 9 years (money doubles much faster)

24 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 500 | Lượt tải: 0

Why People Invest To achieve financial goals, such as the purchase of a new car, a down payment on a home, or paying for a child’s education. To increase current income. To gain wealth and a feeling of financial security. To have funds available during retirement years.

24 trang | Chia sẻ: nguyenlinh90 | Ngày: 20/07/2019 | Lượt xem: 522 | Lượt tải: 0