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Stock Market Return Risk Ratio - If you have a certain amount

Question # 00578945
Subject: Economics
Due on: 08/26/2017
Posted On: 08/26/2017 09:09 AM

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Stock Market Return Risk Ratio

If you have a certain amount of money invested in the stock market for a moment of time, then there is an expected return on that investment (the stock market goes up on average), and a risk, a variance in that return (the stock market flucuates), both of which are proportional to the amount you have invested. As those moments of time are strung together, the expected returns for the different moments add, while the risks (since they are independent from one moment to the next) combine as square root of sum of squares. You have $10,000 to invest over one year. How should you allocate your investment over time to maximize your return/risk ratio?

Tags ratio certain risk return market stock stock time return market moment invested moments risk square root combine ofsquares risks areindependent allocate maximize returnrisk ratio yourinvestment different invest year 0 theamount expected thatinvestment stockmarket money ratioif certain

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Stock Market Return Risk Ratio - If you have a certain amount

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