gender differential paper IJCRB

ijcrb.webs.com
INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
JUNE 2011
VOL 3, NO 2
when it has the highest return at a specific level of risk. Marquetz and Toubin were the first ones
who in addition to return, insert risk as an important factor in investment. they also considered
and student method of minimizing risk with regards to return on asset Iin the bigining, this model
did not attract too much attracthion, but gradually, the financial accepted is seriously. Today
after fifty years, so many model have been formed as remodeled based on that. At first this
model attracts low attention but gradually the financial society accepts it severely and today
many models are built or reconstructed based on it after fifty years.
One of the major factors in Marquitz model is diversity of investment. In fact diversification is a
fundamental issue in finance scope. Common logic always state that don’t put of all your eggs in
one basket. Marquitz model explains the concept of diversification or non-diversification with
the introduction of statistical concept of covariance or quantitative correlation. Substantially
many modern discoveries in finance literature originated from the concept of objective diversity
and offer new applications for this concept (Philip, 2007).
Another important issue in Marquitz model is this risk. In this framework risk is defined as the
probable deviation from the expected return. However, several studies have been performed that
show return's standard deviation could not be considered as a precise criterion for risk, unless
there exists a logical reason to accept that return distribution is a symmetrical distribution
(Falker, 2005). Moreover, there are evidences which state that return distribution function is not
symmetrical (Chen, 2008).
Marquitz in his theory, has inserted assets return variance, return of each assets, the weight of
them in the portfolio and relationship link between these assets as of mayger variable.
Summarized and conceptual diagram of these variables is shown in the following table.
W
i
= weight of each assets in the portfolio
2
δ
i
= variance of return of each assets in the portfolio
E
i
= return of each assets in the portfolio
i= 1, 2, 3,…, n
COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 327