Considerations On Passive Portfolio Management Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1523 Downloads: 7 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? In the last decades, portfolio management became a very important activity on the financial markets. In this way today we could speak about a truly financial industry in US and in Europe, too. Starting with Markowitz [1952][1], modern portfolio theory was developed in order to propose standards for returns, associated risks and for evaluating the quality of the portfolio management. On the financial markets, these activities could be build up in a passive or in an active manner. Passive portfolio approach is recommended especially in the case of efficient capital markets. As long as there are no agents that can acquire systematic abnormal earnings, it is not useful to try to beat the market. The best solution will be to form a portfolio, which will replicate market index. In this way, portfolio return will equal exactly the market return. On the other hand, active portfolio management supposes that not every agent is rational. There are noisy traders (naÃÆ'ƒÂ ¯ve agents), too. In this case, the purpose of active management is to find and to invest in undervalued or overvalued assets and, applying this strategy of investments, the rational agents will reach abnormal earnings buying undervalued assets and selling overvalued assets. Don’t waste time! Our writers will create an original "Considerations On Passive Portfolio Management Finance Essay" essay for you Create order Based on these assumptions, the main question in choosing a right style on portfolio management is if the financial market is efficient. If markets are efficient, it seems to be reasonable to replicate the market index. Thus, every agent will obtain a normal return, equal to the market one. If the investors would follow to gain higher than market return, that it could be possible, according to Fama [1998], only by luck[2]. Practically, the intrinsic logic of passive management is explained by CAPM[3]. Investors will require a higher return only if they will accept a higher risk for their investments. No agents will be able to make judgements in a more suitable way than the other investors will, so no one could achieve abnormal systematic earnings. Certainly, it is possible to reach abnormal earnings, but these ones will have no systematic status. On the other hand, active portfolio could be entirely explained by arbitrage model, based exactly on arbitrage principle[4]. If markets are not efficient, a reasonable hypothesis seems to be that every agent could obtain systematic abnormal earnings. However, this assumption is not true every time. For example, DragotÃÆ'„Æ’ and MitricÃÆ'„Æ’ [2004][5]had proven, for Romanian capital markets, even some tests could validate the market is not efficient, the lack in liquidity offers no possibility to obtain abnormal earnings. More, DragotÃÆ'„Æ’, DragotÃÆ'„Æ’ and Stoian [2004][6]had reveal it is possible that no agent to obtain abnormal earnings, but assets values to be different than the market prices. For these reasons, it could be accepted that, even for inefficient markets, passive portfolio management to be an appropriate solution. Thus, the portfolio manager could justify his own performance based on the market one, which it seems to be a reasonable benchmark. So, it is possible that a 25% portfolio return not to fulfil the investors r equest if the inefficient market give an opportunity for the exact level, but it is sure that a (-25%) portfolio return will not be acceptable for the investors request if the market gain was around (-5%). 2. How to achieve a passive portfolio structure? Portfolio Management construction is based on top-down approach. According to this approach, first, funds are invested on different markets (e.g. capital market, monetary market, real estate market etc.), and then the money allocation for every market will be made relying on portfolio objectives. Second, the money allocated on every market is invested in the most appropriate components (e.g. for capital market the money allocation could be stocks and bonds). Finally, these funds are invested in particular assets, based on some partial objectives (see Figure no.1). Only at this moment the exact assets will be chosen, depending on their performances. ASSET TYPE 1 ASSET TYPE 2 SUB-CATEG. 1.1 SUB-CATEG. 1.2 SUB-CATEG. 1.I SUB-CATEG 2.1 ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ .ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ SUB-CATEG. 1.J ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ ASSET 1.1.1 ASSET 1.1.2 ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ ASSET 1.1.S Figure no.1: Top-down approach in portfolio management Source: DragotÃÆ'„Æ’ DragotÃÆ'„Æ’ [2004][7] To build a passive portfolio, the manager should try to replicate the whole market structure, so to establish what percents should be invested on capital markets, in banks deposits, in insurance policies, etc. After that, for example, capital markets investments could be organised in: (1) stocks markets, (2) bonds markets, and (3) other instruments markets. Next step is to structure stocks markets in: (1.1) listed shares, and (1.2) unlisted shares (see Figure no.2). STOCKS MARKETS BONDS MARKETS OTHER INSTRUMENTS MARKETS ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ .ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ LISTED SHARES UNLISTED SHARES FINANCIAL MARKETS CAPITAL MARKETS ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ Figure no.2: Passive portfolio management In this case, market structure should be known for each component. Financial markets structure could be based on official statistics. For instance, for European Countries based on German financial system, deposits on banks, and, for US, capital markets, could be the most important part. For suitable organising the listed stocks market, the structure of the official Stock Exchange Index for that country could be used as portfolio composition. For example, in Romania, Bucharest Stock Exchange is listing four official indices, named as BET, ROTX, BET-FI and BET-C. For a correct choosing of one or another index for portfolio manager is important to define the proposed liquidity target. Thus, for a portfolio with daily trading, a credible choice would be BET index or ROTX, which contains the most 10, respectively 6, liquid stocks on capital market. If the manager will propose an infrequently trading with portfolio assets, probably the proper index will be BET-C, which contain every stocks listed on BVB. 3. Some questionable solutions Even if passive portfolio management follows a very logical approach some questions still remains open. These questions are related to the extension of the financial markets and to the markets efficiency. Regarding to the financial markets as a whole, it must be pay attention to every opportunity that investors have. Sometimes, it could be interesting to invest, for example, in some physical assets like gold or jewels. If the portfolio has big dimensions, could be considered some direct investments (companies acquiring). One very interesting opportunity is given by real estate market. One real estate property could be considered as an investments, but, also, as a good (for personal use). On the other side, some companies have restrictions related to the ability to invest in specific sectors. A very appropriate example could be the Romanian insurance companies, which has legal restrictions relating to the classes and to the percentage allowed for every class for investing their technical reserves: maximum 60% in municipal bonds, 40% in real estate assets, 50% in listed stocks etc. Because each type of investments could be taking into account for portfolio construction, the market structure should be different from one portfolio to another. Subsequently, we cant discuss about a general market index, because the market is understand in a different manner, as a concept, from an investor to another. Related to market efficiency, the main problem in developing a portfolio structure is that markets are not entirely efficient. There are some markets with a higher level of efficiency (see the listed shares markets), and markets with a lower grade of efficiency (see the real estate markets). In these circumstances, the quantity of available information will affect investors decision. On some markets, investments could follow a clear rule (e.g., a portfolio of listed shares will follow the Stock Exchange Index structure) but this is not the case for other markets (see real estate market). 4. Conclusions Concluding, depending on the market where the passive portfolio management is applied, we will probably have different manner to do this, and the results will be different, too. The most important variables could be the market liquidity, the degree of its efficiency and every investors awareness concerning the financial markets concept. The degree of liquidity will affect the proportion established for every assets class and the quickness associated to every trading, the form of market efficiency (weak, semi-strong or strong) or, by the contrary, its inefficiency will give the degree of importance for passive or active portfolio management. To be more specific, the least aspect could determine the investor to choose a mixed approach, for example to maintain, generally, a passive type of management, but with active accents, because it is difficult to identify a market 100% efficient or inefficient. If the investor had chosen a passive portfolio management, he must find the most appropriate index to replicate its structure. As we mentioned for Romanian case, only for capital market we have four official indices and some other (unmentioned) unofficial ones. At this moment, we can conclude by referring to the third important aspect to take into account, the degree of extension when we talk about financial market concept. Sometimes, based on easiness argument or because the investors are not very well informed, the whole concept of financial markets are reduced to the capital markets one. We sustain the opinion to consider every component of the financial markets first, and finally, based on a rational selection, to build the most appropriate structure for the financial assets portfolio.

A Study On Friday Nights Essay - 1629 Words

Case Study Helen presents as a 45- year-old African American woman who has had a study employment till she got fired a month ago. She demonstrates strength from her honest, courageous, determined, and caring nature. She is open and willing to give counseling a try to help her cope during her difficult time. However, her weakness consists of excessive worry and self-critical due to the fact that she feels like a failure. Yet, Helen demonstrates that her bible reading group on Tuesday nights provides her with support. In addition, she illustrates that visiting her friend which has helped her elevate her mood. Nonetheless, she is facing difficulties with work due to recently losing a job due to making numerous mistakes. In this case, Helen self-referred herself due to various stressors such as job loss and a break-up. The client demonstrates three culturally-linked organizing principles such as environmental, education, support group, and personal lifestyle. Additionally, Helen is articulate and s mart. She demonstrates that she well in school and has an active social life. However, Helen’s body language demonstrate she is sleepy due to her difficulties of falling sleeping. Currently, Helen is not taking any medication or has any medical problems. She does not have any history of substance abuse, abuse, or trauma. At the moment, Helen does not demonstrate any family history of substance abuse history, abuse, and trauma. However, Helen demonstrates that her current moodShow MoreRelatedIdeological Criticism : Small Town Ideology1362 Words   |  6 Pagesinterpretations, themes, and underlying values that are being broadcasted through streaming technologies, the internet, and television in general are important as they shape how Small Town America is conveyed to America and the rest of the World. How does Friday Night Lights (2006-2011) function to remain an ideology of authentic small town America? PRESENTATION OF ARTIFACT: The episode that is under analysis is the first episode, or the pilot of the series. The episode starts with The Dillon Panthers gettingRead MoreAnalysis Of Full Moon Friday The Twelfth 1072 Words   |  5 Pagesâ€Å"Full Moon Friday the Thirteenth† is a story about superstition and whether people should believe it. Throughout the story, Gawande transitions from a very sarcastic tone to a much more serious tone towards the end. This was due to a series of unfortunate events that he never would have expected, coincidentally occurring on none other than Friday the Thirteenth. At first, he attempted to shut down the superstitions and ignored them as if they weren’t a threat. Instead, he succumbed to them and realizedRead MoreTGIF Date Night: Social Interactions1152 Words   |  5 Pagesduring the observation will be used to draw conclusion about the specific social interaction and how it may relate to all social interactions in general. TGI-Friday Date Night This observational study took place at the TGI-Fridays located at Arundel Mills in Hanover, Maryland on two different occasions. The first was on Friday May 2nd 2014, between 8:00 and 9:30 pm. The restaurant was full of people and the atmosphere was jovial. There was an array of people for older professional peopleRead MoreSimplicity878 Words   |  4 Pagesthe three seem to reach a boiling point. I currently work at a waitressing job in which the night shifts are usually the ones that benefit me the most. I attend school at Hunter College 4 days a week. Mondays and Thursdays from 8 am to 4 pm, while Tuesdays and Fridays are from 11 am to 1 pm. My work schedule is for the most part from Tuesday, Thursdays, Fridays, Saturdays, and Sundays (mid day to late nights). Going to school four days a week and working 5 days a week is such a hassle in my life.  Read MoreSite Visit : Temple Beth El1519 Words   |  7 Pagesthe day each civil calendar year; the Jewish calendar is based on a 12 month lunar cycle with an extra month occasionally added. I finally decided on Temple Beth El in Hollywood, FL as my site visit location. Prior to attending Shabbat services on Friday, October 9, 2015; I made a phone call and found out that the temple is a reform congregation, which means it is a bit more liberal. As stated by Kaplan in American Reform Judaism â€Å"the term reform refers not to a particular reform that occurred atRead MoreSite Visit : Temple Beth El1518 Words   |  7 Pagesthe day each civil calendar year; the Jewish calendar is based on a 12 month lunar cycle with an extra month occasionally added. I finally decided on Temple Beth El in Hollywood, FL as my site visit location. Prior to attending Shabbat services on Friday, October 9, 2015; I made a phone call and found out that the temple is a reform congregation, which means it is a bit more liberal. As stated by Kaplan in American Reform Judaism â€Å"the term â€Å"reform† refers not to a particular reform that occurredRead MoreThe Importance Of The Symbol System Of The Msm Liturgy On Holy Friday1574 Words   |  7 Pagesoutcome. The purpose of this ethnographic report is to examine the effectiveness of the symbol system of the MSM liturgy in terms of the ritual purpose and the extent of the reflection on Christian stories and beliefs of the Easter Triduum. This case study aims to analyse the level of engagement and understanding in the community of the symbol system represented in the MSM liturgy in terms of the Easter Triduum by surveying students and conducting an interview. The symbol system of the MSM liturgy onRead MoreWhy Do More Weekend Activities Are Necessary1358 Words   |  6 Pagesaspect, but for an abundance of more reasons. Students can be creative and relieve some of their weeks stress through activities. Furthermore, students can obtain some physical activity or even learn some leadership skills. Having a movie night each Friday night, hosting parties that don’t involve alcohol, or even putting on a Dodgeball tournament in the gym, can help keep students on campus. Providing more activities will help keep students on campus and involved; in view of the fact that, then thereRead MoreJesus Christ Called Holy Week Essay1726 Words   |  7 PagesOn Palm Sunday, Jesus and his disciples spent the night in Bethany, a town about two miles east of Jerusalem. In all likelihood, Jesus stayed in the home of Mary, Martha, and Lazarus, whom Jesus had raised from the dead. Beginning with Palm Sunday, we will walk through the week; the steps of Je sus Christ called â€Å"Holy Week†. We will visit each of the major events that occurred during our Savior s week of passion. On the Sunday before his death, Jesus began his trip to Jerusalem, knowing that soonRead MoreFriday Night Lights Byh.g Bissinger1256 Words   |  6 Pages Sports are so glorified in some areas that schools will put athletics in front of academics. This is exactly what happened the book Friday Night Lights by H.G Bissinger. BIssinger explains that the town of Odessa houses the school Permian where everyone grows up on football. The school and the town give so much praise to the football team that some football players couldn t care less about class and eventually the teachers don’t care how those players do in class. Mount Vernon is a place where

How Do We Come To Aid Others Free Essays

Asian You 801 We will be happy to help others. We will help others help us too. Help others can enhance our own happiness. We will write a custom essay sample on How Do We Come To Aid Others or any similar topic only for you Order Now Helping others is a blessing. If you want to help people,you can read â€Å"Angels In the Snow† and â€Å"Mammalian. † The two articles are both about kids helped others and can inspiring you to help others. Can you help people? Holly SST. Lifer’s â€Å"Angels In the Snow† tells about a group of Dragon Slayers rescues the victims. The Dragon Slayers have Erin Martinet,Pete Brown,Lydia Hess,and more. They live and work in Anis,Alaska. They respond to about 400 calls a year. Pete Brown trained brainchild for emergency medical training. And Brown’s daughter, March,is medic rescue swimmer in the Navy. Emily Ann?s article tells about a girl named Mammalian. Mammalian was severely bullied her peers in her need to transfer school. She gradually gained confidence in her new school. She learned to love and the need for a community to help them gain a sense of selectors. Mammalian used a computer and her social media technology â€Å"Hesitate† to help others achieve selflessness. She helped many people to overcome the bullying and exclusion. The stories inspired me by me should try our best to help people in needs. We can help them. In the article â€Å"Angels In the Snow† , â€Å"Martinet found the boy huddled behind the bathroom door and rushed him out to safety. † And in the Emily Ann.’s article, â€Å"Though her work she has been able to connect and empower millions of young people globally to help them realize he power of selfless and acceptance as a means to overcome bullying and exclusion. Martinet is a Dragon Slayer who helped a boy, and Mammalian is a students helped some peer. Think we should act like them to help people who need to help. In the article â€Å"Mammalian†, â€Å"so she took advantage of the resources available to her : a computer, internet connection, and social media, know, to build an online community for youth. How to cite How Do We Come To Aid Others, Papers

How Do We Come To Aid Others Free Essays

Asian You 801 We will be happy to help others. We will help others help us too. Help others can enhance our own happiness. We will write a custom essay sample on How Do We Come To Aid Others or any similar topic only for you Order Now Helping others is a blessing. If you want to help people,you can read â€Å"Angels In the Snow† and â€Å"Mammalian. † The two articles are both about kids helped others and can inspiring you to help others. Can you help people? Holly SST. Lifer’s â€Å"Angels In the Snow† tells about a group of Dragon Slayers rescues the victims. The Dragon Slayers have Erin Martinet,Pete Brown,Lydia Hess,and more. They live and work in Anis,Alaska. They respond to about 400 calls a year. Pete Brown trained brainchild for emergency medical training. And Brown’s daughter, March,is medic rescue swimmer in the Navy. Emily Ann?s article tells about a girl named Mammalian. Mammalian was severely bullied her peers in her need to transfer school. She gradually gained confidence in her new school. She learned to love and the need for a community to help them gain a sense of selectors. Mammalian used a computer and her social media technology â€Å"Hesitate† to help others achieve selflessness. She helped many people to overcome the bullying and exclusion. The stories inspired me by me should try our best to help people in needs. We can help them. In the article â€Å"Angels In the Snow† , â€Å"Martinet found the boy huddled behind the bathroom door and rushed him out to safety. † And in the Emily Ann.’s article, â€Å"Though her work she has been able to connect and empower millions of young people globally to help them realize he power of selfless and acceptance as a means to overcome bullying and exclusion. Martinet is a Dragon Slayer who helped a boy, and Mammalian is a students helped some peer. Think we should act like them to help people who need to help. In the article â€Å"Mammalian†, â€Å"so she took advantage of the resources available to her : a computer, internet connection, and social media, know, to build an online community for youth. How to cite How Do We Come To Aid Others, Papers

Heart of Darkness - by Joseph Conrad free essay sample

A look at two different viewpoints of Conrads novel, The Heart of Darkness. In Heart of Darkness by Joseph Conrad, there is an impression that Conrad is trying to convey. To some this may not appear to be as evident because his meaning is deeper than what is on the surface. Many critics of the novel note that the techniques that Conrad uses cause him to obscure his true intentions. Some of those who analyze his writing feel that the way he describes the Africans and the ways the Europeans treated them are explicitly racist. Conrad was ultimately trying to present us to the nature of the comparisons by which the whites act towards the blacks and not to demean the Africans. He puts his focus on the white mans attack of colonialism on the Africans residing along the Congo. The use of many actual events makes this more of a story of enormity rather than entertaining. We will write a custom essay sample on Heart of Darkness by Joseph Conrad or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page

Substance Abusing Offenders an Example of the Topic Government and Law Essays by

Substance Abusing Offenders by Expert Prof Akunga | 28 Dec 2016 Introduction Need essay sample on "Substance Abusing Offenders" topic? We will write a custom essay sample specifically for you Proceed Drug abuse or substance abuse is an ever-present problem on the minds of Americans. Although the American government has done a lot in terms of programs to alleviate this persistent problem in society, still, this particular social illness remains. It is observed that those who use drugs are more prone to commit criminal offences than those who are not users (Anglin & Speckart, 1984, Cited in The Report of the National Task Force on Correctional Substance Abuse Strategies). What are some of the approaches being used by the American government to deal with this problem? What means are more effective and are indeed bearing fruit? Treatments There are many varied means being applied to treat substance-abusing offenders. Incarceration alone has been proven to be not enough in dealing with drug-using criminals. There is of course immediate and decisive meting out of discipline when offenders are put to jail and temporary prevention of further crimes are averted; but the fact of the matter is prison or jail terms end. Once drug-using offenders are released from prison, the likelihood is that they will again return or resume their criminal careers. The so-called revolving door of justice revolves from criminal act, arrest, conviction, incarceration or community supervision, release, and return to crime (Anglin & Speckart, 1984, Cited in The Report of the National Task Force on Correctional Substance Abuse Strategies). This has become the cycle. There has to be an effective program that would break this vicious cycle and help the offenders to overcome their addiction and thus prevent them from committing the same or more serious crimes. When this is effectively done, American society will be more safe and secure. Substance abuse interventions in corrections Usually, felons in correctional agencies are adults. These are people whose criminal backgrounds started way back into their early years inside their homes. They began using illegal drugs at early ages. These, usually, have no education, no acquired skills, no successful work experience, were not raised or familiar with stable home conditions; if anything, theyre raised in families that support and encourage criminal values, attitudes, and behavior, etc. With these kinds of people to deal with, the task is not rehabilitation but more of habilitation (Anglin basics of life necessary for them to function properly within a society without becoming a threat to the populace. Fortunately, most of our correctionals have a comprehensive program which includes holistic approach that is effective in treating drug-using offenders. The program includes: 1. Clear mission statement and criteria for appropriate participants, as well as assessment strategy. 2. Moral support and understanding of the agencys administrators and their staff. 3. Well-trained staff who constantly keep an update and has an on-going education with regards to their therapeutic work. 4. Maintain consistent intervention strategies which are provided through linkages with other correctionals as offenders move through the system. i.e. theyre being followed up. 5. Continuous evaluation (Anglin & Speckart, 1984, Cited in The Report of the National Task Force on Correctional Substance Abuse Strategies). Case Management Program One of the most important innovations of the past decades is the program called case management program (http://psychservices.psychiatryonline.org). It deals with mental health and community care. The program was so designed as to deal specifically with persons having substance use disorders. Because persons with this problem are suffering from the multifaceted and chronic nature of this disorder, case management is a program of treatment that is comprehensive and continuous in its approach. Its strategy is client-centered and aims to treat every inpidual differently according to the inpiduals unique needs. Since it is believed that persons with substance use disorders suffer from multiple needs, the care administered has to be continuous and coordinated. Although case management approach is modeled after mental treatment examples, it is nevertheless distinct in that is was developed separately and is aimed particularly on substance abuse. Hence, there is a strong distinction between them. Experts have shown that case management approach is effective in that it could reduce the wear and tear that usually is the result of drug addiction. It helps to improve both the psychosocial and drug and alcohol outcomes among persons with substance use disorders Reference: Anglin, D., & Speckart, A. (1984). Narcotics use and crime: A confirmatory analysis. Unpublished report. University of California at Los Angeles, Department of Psychology, cited in Intervening with substance-abusing offenders: a framework for action. National Institute if Corrections. The Report of the National Task Force on Correctional Substance Abuse Strategies http://psychservices.psychiatryonline.org Holloway F, Carson J: Case management: an update. International Journal of Social Psychiatry 47(3):2131, 2001. Cited in Case Management : American Psychiatric Publishing, Inc. www.psych.org

Team player Essays

Team player Essays Team player Essay Team player Essay A team player is a person willing to work, collaborate, and support his peers. First a team player is a hard worker. He will push himself beyond his own limits and demonstrate that a Job is never too hard when we all work together. For example, someone lazy on a team like a coach or a bad player could cause a loss rather than a win by not performing to his fullest potential or not working hard enough to support his peers. Therefore, a team player is always looking to perform at the very best of his skills to help his team be successful. Next a team player cooperates with his team ND works along with it to help his peers complete the task if they need help. For example in a restaurant kitchen everyone needs to be a team player and has to work with the others and help each other if they need a hand to finish an order, in the grill station sometimes there are too many orders for one cook to handle then all so other cooks or the chef step in the station to help the cook pull out the orders . A team player also respects others points of view and opinions which help him grow and helps the others. Finally, a team player Is energetic, and brings encouragement ND support to his team he cheers them up, and is always willing to give a hand to a teammate for example in a baseball team, players train together,pet talk each other, communicate each other to strengthen their relationship as a team . A team player brings security and happiness to the team when hes around and his peers look at him as a figure or an Idol. For example players In a team look up to be the best,respected and admire by his peers. In conclusion, a team player Is willing to support, collaborate and be completely Involved with each member on his team.