## 12.1 Portfolio Analysis (Quick Intro)

• Investment is a process of maximising wealth.

• We want to maximise expected return

• We want to minimise the risk

• Risk Premium: Difference between returns of a risky asset and risk free asset $$R_{p}-R_{f}$$

• Diversification: Process of diversifying risk in a portfolio.

• See Chatper-16 from for further details.

### References

Ruppert, David. 2015. Statistics and Data Analysis for Financial Engineering. 2nd ed. Vol. 13. Springer.