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2015, vol. 12, iss. 1, pp. 31-46
Investment risk management by applying contemporary modern portfolio theory
aUniversity of Kragujevac, Faculty of Economy
bUniversity of Kragujevac, Faculty of Hotel Management and Tourism, Vrnjačka Banja

emailmilenaj@kg.ac.rs, m.lekovic@kg.ac.rs
Project:
Preclinical investigation of bioactive substances (MESTD - 41010)

Keywords: investment risk; portfolio theory; diversification; global financial flows
Abstract
Investment risk is the principal threat to the assets side of the balance sheets of financial institutions. It is evident that investors who concentrate their wealth on one type of securities can rarely be found. Instead, they tend to invest diversified portfolio of securities. This reduces the degree of risk of the expected return, which depends both on the absolute risk of each investment in the portfolio, and the relationship that exists between individual investments within the portfolio. The paper analyzes the investment risk management by using modern portfolio theory in both national and global financial f lows. At the same time, the paper considers the risk management models that ensures efficient portfolio diversification, aiming at investment risk reduction. It is pointed out that the investment risk management in modern financial f lows is a complex process, and that the development of financial theory goes towards improving, soft risk management method.
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article language: Serbian
document type: Original Scientific Paper
DOI: 10.5937/MegRev1501031J
published in SCIndeks: 18/01/2016

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