DEPENDENCE OF RISK AND PROFITABILITY OF FINANCIAL INSTRUMENTS ON TIME HORIZON OF INVESTMENT
Abstract
This article is about the questions of evaluation of risk and profitability at investment in the financial
market. The classical approaches to the risk assessment of the most popular financial instruments: stocks and
bonds were considered in this work. The rates describing the volatility of the financial instrument were used
in order to quantify the risk of the instrument. In a short time horizon the volatility of stock is considerably
higher than the volatility of bond and it makes the stock more risky finanacial instrument than bond. When
the time horizon increases the volatility of stock considerably goes down. The analysis of American and
Russian markets shows, that the stock is more preferable object of an investment when the time horizon
increases.
market. The classical approaches to the risk assessment of the most popular financial instruments: stocks and
bonds were considered in this work. The rates describing the volatility of the financial instrument were used
in order to quantify the risk of the instrument. In a short time horizon the volatility of stock is considerably
higher than the volatility of bond and it makes the stock more risky finanacial instrument than bond. When
the time horizon increases the volatility of stock considerably goes down. The analysis of American and
Russian markets shows, that the stock is more preferable object of an investment when the time horizon
increases.
About the Author
N. I. Berzon
Государственный университет - Высшая школа экономики
Russian Federation
Russian Federation
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Review
For citations:
Berzon N.I. DEPENDENCE OF RISK AND PROFITABILITY OF FINANCIAL INSTRUMENTS ON TIME HORIZON OF INVESTMENT. University Management: Practice and Analysis. 2008;(3):65-72. (In Russ.)
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