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...That the two major goals of financial activity are cash
flow transfers, over time and risk transfer. Investors can
maximize their personal return by choosing the best possible
combinations of current and future cash flows and by identifying their
most comfortable levels for risk and return.
...That an entity transferring future expected income levels into the present
is called a Funds Deficit Unit. One choosing to transfer current income
for use in the future is called a Funds Surplus Unit. These two units
have a symbiotic relationship.
...That investors can find an optimal efficient portfolio by trading off risk
for expected return. Those seeking a higher return will choose more risk than
those who do not desire a higher return, who are more concerned with minimizing
risk.
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