Learn about beta and show you how to use it to evaluate a portfolio of investments.
- [Narrator] Investors and other financial analysts…use many tools to evaluate a company's…risk of loss and volatility of returns.…A company with higher risk must promise…higher returns to its investors to compensate for that risk.…One measure of risk is what analysts call beta.…In this movie, I'll describe beta,…and show you how to use it…to evaluate a portfolio of investments.…Our goal is to find the optimal combination…of investments given certain input values.…Our criterion could be to maximize profit.…
Although, isn't that always the goal?…We could also meet a profit goal with minimum risk.…Or, we could create a portfolio…with a target level of risk.…Every investor has a certain amount of risk…that they're willing to tolerate.…Some will allow for very high levels of variation…within their investments with the hope of,…over the long run, receiving high value in return.…While others prefer to play it safe,…and go with relatively risk-free investments.…
The question you're probably wondering is…in this context, what is risk?…
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- Finding target values using Goal Seek
- Finding a solution using Solver
- Tuning investment portfolios
- Organizing worksheets
- Creating objective and control formulas
- Experimenting with different constraints
- Optimizing resource placement
- Defining decision trees