On March 31, 2010, Margin trading has launched formally in China. It's a "double-edged sword". It not only provides the investors with a larger profit opportunity, but also brings a higher risk. Thus, for investors, it's very important to optimize the investment portfolio. Based on the classical Mean-Variance Model proposed by Markowitz, portfolio selection with transaction costs in margin purchases has been studied in this paper, and the model was solved with the application of the geometrical method. All of these are to help the investors.
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