Traditional approach

1. Good Morning

2. Traditional Approach Presented By: Nikhil B M.com Vijayanagara Sri Krishnadevaraya University Bellary

3. Portfolio Portfolio is a combination of securities such as stock, bonds and money market instruments.

4. Steps in Traditional Approach

5. Analysis of Constraints Income needs Liquidity Safety of the principal Time horizon Tax Consideration Temperament

6. Determination of Objectives Growth in Income Capital appreciation Preservation of capital

7. Selection of Portfolio Objectives and asset mix Growth in income and asset mix Capital appreciation and asset mix Safety of principal and asset mix

8. Assessment of Risk and Return Tradition approach has some basic assumption like the investor prefers larger to smaller return from securities which requires taking risk. The risk are namely interest rate risk, purchasing power risk and market risk. The ability to achieve higher return is dependent upon his/her ability to judge risk and his ability to take specific risk.

9. Diversification Top quality bonds can minimise financial risk while stocks provide better inflation protection. Depending on the preference and needs of investor appropriate combination is selected.

10. Thank You