Elasticity of Taxes
In the previous article, we have studied the concepts of the tax base and tax rate individually. Now, it is time to see how the two react. We already know the basics to some extent. We know that the tax base and the tax rate move in opposite directions. Hence, ideally, if we increase the […]
What Different Stakeholders want from a Bankruptcy?
When a company files for bankruptcy, the interests of many different parties are impacted. This is the reason that bankruptcy cases can be very difficult to conclude. There are a lot of stakeholders involved, and each wants to pursue their own interest at the expense of everyone else. The result is that a tug of […]
Pros and Cons of Financial Fair Play Rules
In the previous article, we have already seen how certain football clubs in Europe have been using their money power in order to muscle their way to the top of the league. Hence, in order to prevent this, certain organizations such as EUFA have created certain financial fair play rules. The aim of these rules […]
BB&T and Sun Trust Bank Merger
BB&T and Sun Trust bank are both giant institutions in their own right. However, now since they have decided to merge, another “mega-bank” is likely to come into existence in America. Both these banks have been in operation for over 100 years, hence have their own heritage. Financial analysts are not clear on whether the […]
Omnichannel Retailing and its Benefits
The past few years have witnessed the rise of online retail. As a result, there has been a persistent debate about whether or not brick-and-mortar stores have outlived their utility. There are many critics who believe that this may not be the case. Even though online retail has significant advantages, it still lags behind traditional […]
A combination of various investment products like bonds, shares, securities, mutual funds and so on is called a portfolio.
In the current scenario, individuals hire well trained and experienced portfolio managers who as per the client’s risk taking capability combine various investment products and create a customized portfolio for guaranteed returns in the long run.
It is essential for every individual to save some part of his/her income and put into something which would benefit him in the future. A combination of various financial products where an individual invests his money is called a portfolio.
The art of changing the mix of securities in a portfolio is called as portfolio revision.
The process of addition of more assets in an existing portfolio or changing the ratio of funds invested is called as portfolio revision.
The sale and purchase of assets in an existing portfolio over a certain period of time to maximize returns and minimize risk is called as Portfolio revision.
There are two types of Portfolio Revision Strategies.
Active Revision Strategy involves frequent changes in an existing portfolio over a certain period of time for maximum returns and minimum risks.
Active Revision Strategy helps a portfolio manager to sell and purchase securities on a regular basis for portfolio revision.
Passive Revision Strategy involves rare changes in portfolio only under certain predetermined rules. These predefined rules are known as formula plans.
According to passive revision strategy a portfolio manager can bring changes in the portfolio as per the formula plans only.
Formula Plans are certain predefined rules and regulations deciding when and how much assets an individual can purchase or sell for portfolio revision. Securities can be purchased and sold only when there are changes or fluctuations in the financial market.
Aggressive Portfolio consists of funds that appreciate quickly and guarantee maximum returns to the investor.
Defensive portfolio consists of securities that do not fluctuate much and remain constant over a period of time.
Formula plans facilitate an investor to transfer funds from aggressive to defensive portfolio and vice a versa.
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