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Diversified Portfolio for Risk Management

Build a robust investment portfolio with varying risk profiles to protect principal under different market conditions. This strategy helps manage potential losses and drives balanced returns over time.

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Diversified Portfolio for Risk Management

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  1. Friday, April 13, 2012

  2. Example Security 1: Responsible for losses between 50% and 100% of principal: Rating AAA X Security 2: Responsible for losses between 0% and 50% of principal: Rating BBB Portfolio X has a principal of $100 million and a 2% chance of a loss over the next five years. It is rated BBB

  3. Further Securitization Security 1: Responsible for losses between 50% and 100% of principal: Rating AAA Security 2: Responsible for losses between 20% and 50% of principal: Rating AA X Security 3: Responsible for losses between 0% and 20% of principal: Rating BBB

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