 In this section, I will explain the concept of portfolio optimization. So, whenever a portfolio is developed, the basic idea behind that is to provide the maximum level of expected return at a certain risk tolerance level. So, investors define that we have to take a very high risk or a low risk. On that level, the maximum level of risk that they want to take, on that, what could be the best possible combination of various types of assets, which will give them maximum expected return. We call that particular concept as portfolio optimization. So, in this particular process, there are two steps involved. The first one is that the first portfolio, the professional asset managers, they firstly go for different combinations of the risky assets. They account for which types of risky assets we can combine. And secondly, they combine these risky assets with risk-less assets. So, firstly, they decide the combination of risky assets and then they add risk-less to develop a portfolio. So, a portfolio is composed of both types of assets, both the risky assets as well as the risk-less assets. And then together, they go for combining in different ways the different assets which they have decided to take with the financial assets to develop a portfolio. Then they decide the proportion or weight of the portfolio. If you have 100 rupees to invest, then you are going to invest 30 rupees in risky assets, 70 rupees in risk-less assets, what could be the combination. So, the weights are decided according to the level of risk tolerance of the investor. So, if there is a single risky asset portfolio, then it is not necessary that there is only one risky asset, then several risky assets are added to develop a risky asset portfolio. And then there are a number of things which we are going to discuss subsequently that are considered when we are basically we are trying to go for an optimal portfolio. So, we keep a lot of important things in mind. Risk-less asset is that asset or that security in which you are sure that we are going to get this rate of return in every condition. So, there is an example for that which is a priori bill which is issued by the state bank or by any central bank. On that, there is a perfect prediction that if you have invested in the 3 months priori bill, then suppose the rate that they have offered you is 6%, then you will be sure that after 3 months, on maturity, when we return this bill, then we are going to get 6% interest on this. So, there are such assets which have a predictable rate of return in which there is no doubt, there is no shortage, there is no chance of loss. Or in other words, we say that all those returns on any assets which have no risk involved or we say that the risk that you have, we call it zero. So, we call such assets as risk-less assets where for which the predictable rate is perfectly known and you know that this is not going to change and the element of risk is equal to zero, the probability of risk is zero, so that type of asset is known as risk-less asset. When the specific investors are not identified, there could be a number of different types of risk-less assets which are developed or accounted for in the portfolio generally. And we have to take into account the trading horizon. We discussed the trading horizon earlier, that is the smallest time period in which you have to retain the decision and after so many years, you will reconsider your decision that particular time period in which you have to retain the decision that is known as the trading horizon. So, we have already discussed it. So, when we are going to generally develop the portfolios, we look at the various risk-less assets and we combine them with the risky assets. So, for example, suppose I am going to tell you about the trading horizon of risk-less asset that suppose we assume that a Pakistani rupee if you decide that this is our unit of account on which we will invest and the trading horizon you have kept is for one day. I have to invest and the next day I have to return it. So, your risk-less rate of this example will be the interest rate which is going to be mature on the next day. We will say that our trading horizon was one day and our unit of account is basically the currency in which you are going to do your business. It can be dollar, it can be yen, it can be park rupee, it can be pound sterling. So, that is the unit of account. So, when we account for risk-less asset then we have to decide the unit of account and we have to decide the trading horizon and we have to decide the unit of account because obviously trading horizon is another important dimension because as we all know that the currency value is above the time. So, this trading horizon also matters a lot and you have to deal with the currency what is the unit of account that also plays an important role.