Finance School of Management Portfolio selection A study of how people should invest their wealth optimally A process of trading off risk and expected return to find the best portfolio of assets and liabilities Narrow and broad definitions How much to invest in stocks bonds. and other securities whether to buy or rent ones house What types and amounts of insurance to purchase How to manage one's liabilities How much to invest in ones human capital uesTc4 Finance School of Management Portfolio Selection ❖ A study of how people should invest their wealth optimally ❖ A process of trading off risk and expected return to find the best portfolio of assets and liabilities ❖ Narrow and broad definitions: – How much to invest in stocks, bonds, and other securities – Whether to buy or rent one’s house – What types and amounts of insurance to purchase – How to manage one’s liabilities – How much to invest in one’s human capital