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Mathematical Model of Financial Investment Risk

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Document pages: 10 pages

Abstract: This paper establishes the income and risk model in financial investment based on multi-objective programming theory, aiming to analyze the relationship between risk and return in financial investment and discuss the relationship between the risk the investor shall bear and decentralization degree of investment project. MATLAB software is used to analyze the investor’s optimized return under fixed risk level and the minimized risk with defined benefit. In addition, it chooses the optimal portfolio under such risk level with respect to the bearing capacity of different risks. This paper performs sensitivity analysis of risk in income model using LINGO software, and puts forward the optimal portfolio for the investor without special preference. Calculations show that the model established is satisfactory in determining the optimal portfolio.

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