Risk and Return Analysis Paper Creating the right balance of securities in a diversified portfolio is crucial to maximizing return and minimize risk. This can be done through analysis of current and past activity of each product. Through a risk assessment, return analysis, researching the beta of each security, and reviewing the average risk and return, we can determine the weights of our securities and devise the strongest portfolio to limit risk and maximize return. As a team, we decided to remain with our original five investments; Ford, Microsoft, The Home Depot, Procter & Gamble, and UPS to create a strong diversified portfolio that will meet our expectations.
Risk Assessment and …show more content…
Risk tolerance is based on the risk-return trade off. Inflation has a significant impact on investor’s risk tolerance levels. Inflation is the rise in prices of a certain period. A rise in inflation results in a reduction in the purchasing power of a dollar for a specific period. The same amount of money cannot purchase the same of goods and services it originally could. As interest rate increase to