| asset allocation decision | Choosing among broad asset classes such as stocks versus bonds.
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| capital allocation decision | Allocation of invested funds between risk-free assets versus the risky portfolio.
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| capital allocation line | A graph showing all feasible risk–return combinations of a risky and risk-free asset.
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| capital market line | A capital allocation line provided by the market index portfolio.
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| certainty equivalent | The certain return providing the same utility as a risky portfolio.
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| complete portfolio | The entire portfolio, including risky and risk-free assets.
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| passive strategy | Buying a well-diversified portfolio to represent a broad-based market index without attempting to search out mispriced securities.
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| reward-to-variability ratio | Ratio of a portfolio's risk premium to its standard deviation.
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| risk-free asset | An asset with a certain rate of return; often taken to be short-term T-bills.
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| risky asset | An asset with an uncertain rate of return.
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| security selection decision | Choosing the particular securities to include in a portfolio.
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