DIVERSIFICATION APPLICATIONS IN PORTFOLIO MANAGEMENT

Abstract

An investment is a sacrifice of current money or other resources for future benefits. Numerous avenues of investment are available today. The two key aspects of any investment are time and risk. Very broadly, the investment process consists of two tasks. The first task is security analysis which focuses on assessing the risk and return characteristics of the available investment alternatives. The second task is portfolio selection which involves choosing the best possible portfolio from the set of feasible portfolios. Construction of portfolio is only part of the battle. Once it is built, the portfolio needs to be maintained. The market values, needs of the beneficiary, and relative merits of the portfolio components can change over time. The portfolio manager must react to these changes. Portfolio management usually requires periodic revision of the portfolio in accordance with a predetermined strategy. The type of sampling technique used is Simple Random Sampling wherein a questionnaire was prepared and distributed to the retail investors. The investor’s profile is based on the results of a questionnaire that the Investors completed. The Sample consists of 50 people from various backgrounds. The target customers were only the retail investors who invest in various avenues so as to know about their knowledge and concern regarding the economy, principal invested, investment options, market conditions etc. According to the opinion of these investors interpretation has been done and there has been findings and conclusion along with some recommendations.