Interactive simulation model for risky financial decision making

Abstract

Portfolio and capital markets theory are reviewed. Procedures are proposed to select a portfolio of risky alternatives that best reflects a level of risk appropriate to parameters established for individual decision makers. The ability of financial accounting information to enable these decision makers to select a portfolio of risky alternatives that best reflects this desired exposure to risk is evaluated by an interactive simulation model. The model is appropriate for evaluating the ability of accounting information to convey information to decision makers for the purposes of portfolio selection or managerial financial decision making.