Major new approaches and techniques to investment management have been introduced in recent years to assist portfolio managers in estimating returns and in controlling risk levels in their portfolios.
Major new approaches and techniques to investment management have been introduced in recent years to assist portfolio managers in estimating returns and in controlling risk levels in their portfolios. The linear single-index model that uses a beta coefficient has received considerable attention and discussion among professional analysts. The author of this paper reviews three major portfolio models and presents a multi-index model that has a potential of being a significantly useful extension to the existing single-index model and to beta theory.