Theorey of portfolio selection

Book Reviews Please send books for reviewto C.B. Tilanus, Eindhoven University of Technology, P.O. Box 513, 5600 MB Eii~dhoven,Netherlands selection under capital rationing, vide Weingartner, ere; options and forward contracts were not considered. Perhaps the title of the book could be chart.. god to include the word "Introduction"? For an undergraduate text, I was also disturbed by the lack of exercises or assignments which I myself find invaluable. This book is a recent addition to a series of aceounring and finance. The general editors to the series, in their preface, stress that "the emphasis ... is upon recent work", it is unfortunate therefore that the most recent reference in this book is 1974 and most are in the sixties or earlier. I always ask myself to whom I could recommend the book. Not, I think, to undergraduates as a course text because of its considerable limitation, but to libraries as a useful reference to some of the simpler points, which is where I will donate this review copy!

Terence M. RYAN Theorey of Portfolio Selection Macmillan, Lor~don, 1978, viii + 143 pages, £ 3.95 The book put,ports to be an introductory text on the theory of po~.tfoho selection, suitable for undergraduate courses Lu finance. The initial groundwork for the book is laid by an introductory and qualitative discussion on portfolio management, followed by a brief look at modern utility theory and rational behaviour. The book then divides into two parts: the first on asset selection under certainty, where the concepts of NPV, internal rate of returns and similar measures are developed under a variety of assumptions. Portfolio selection under uncertainty forms the latter half of the book, starting with a discussion on risk and its various sources, and moving onto the Markowitz meanvariance and Sharpe index models. Examples of diversification are provided under different assumptions of intercorrelation. The book concludes with chapters on empirical evidence aoout-',ke efficiency of security markets (principally in America) and on the construetion of optimal portfolios over multiple-time-periods. The author has taken obvious pains to reduce any necessary prior knowledge to a minimum, particularly mathematical knowledge. A main statistical appendix is provided, together with short ones on quadratic functions and Newton's approximation. First of all may I say I found the book lucidly written, better on the qualitative discursive sections than the mathematic'A ones, which I thought were rather variable in the demands they made on the reader. I would suspect the be.ok was based on lectures actually given to undergraduates - not that it is any the worse for that - and therefore the subject matter is moulded by accompanying courses. There were, I felt, some serious omissions - e.g. assets with inequal lifetimes were very cursorily treated; the Capital Asset Pricing Model was not mentioned at all, nor were Beta coefficients explicitly; there was no asset

R. FLA VELL Imperial College London, U.K.

David W. PEARCE and lngo WALTER (Eds.) Resource Conservation: Social and Economic Dimensions of Recycling Longman, London, 1977, xv + 383 pages, £ 17.50 According to the declared aim of the editors this book is meant as a reference work on the social and economic dimensions of materials recycling policy. It is the outcome of an international symposium held in Italy in November 1976. The volume contains 17 revised papers grouped mainly into 3 sections: 1. Economic I;Jtmensions of Materials Scarcity (4 contributions) 2. Recycling: Problems and Scarcity (7 contributions) 3. Sector Studies (5 contributions) The 21 contributors represent un!versities, research institutes, and government agencies from the USA (9), UK (6), Germany (3), Canada (2), and France (1).

© North-Holland PublishingCompany European Journal of Operational Research 5 (1980) 284-286 284