I address no one. I just want to discuss a little about CFA books. why CFA program dose not cover the discussion similar to the author discussion. CFA program explains many formula after they assume the risk of a stock is already known.
assumption that the risk of a stock is already known is unrealistic. ???????
the discussion of the author is one about risk and, so, is valuable.
I am a successful stock investor in vietnam. I am vietnamese and have to learn english hard to have middle English level. many words I write here is mispelled. I know but I do not know which words.
I do not know what is Risk in Mokovick Frontier line. I go to cfa forum to ask but no one answer.
the author insists that she can find a stock with lower risk and higher return. This point is contradictionary with the concensus that lower risk must go with lower return. this point is relevant to Risk in Mokovic Frontier line.
the rule is simple. if you know a stock is riskier than bond, you require higher return from the stock. if you know stock A is riskier than stock B, you require higher return in stock A. CFA program assumes that we know the risks of all stock and we go to a portfolio with reduced risk. the problem is here, not every person know that stock A is risker than stock B. and the author idea is that she can get both higher return and lower risk.
every person know that bond is free risk and we get 4 percent from a bond. if we invest in stock, we need 10 percent because stock is riskier than bond. all person know this case. but we can not apply this case to every investment case. makovic frontier line assume that we know risk of all stock in the portfolio and we can combine some of them into a list which have reduced risk.
the key to investment is to identify the risk. this point is explained in this article by the indian practitioner. after we identify the risk of each stocks, we combine them in to a portfolio.
I am reading book 4 level 1 of CFA program . and I see that for each stock we have a Risk R and an expected return. what is risk here ?