Week 10,11Risk and Return
After studying Chapter 5, you should be able to:
l Understand the relationship (or “trade-off ”) between risk and return.
l Define risk and return and show how to measure them by calculating expected return, standard deviation, and coefficient of variation.
l Discuss the different types of investor attitudes toward risk.
l Explain risk and return in a portfolio context, and distinguish between individual security and portfolio risk.
l Distinguish between avoidable (unsystematic) risk and unavoidable (systematic) risk; and explain how proper diversification can eliminate one of these risks.
l Define and explain the capital-asset pricing model (CAPM), beta, and the characteristic line.
l Calculate a required rate of return using the capital-asset pricing model (CAPM).
l Demonstrate how the Security Market Line (SML) can be used to describe the relationship between expected rate of return and systematic risk.
l Explain what is meant by an “efficient financial market,” and describe the three levels (or forms) to market efficiency.
Download Files
- Week 1,2 Role of financial management
- Week 3,4 The Business, Tax, and Financial Environments
- Week 5,6 : The Time Value of Money
- Week 7,8 The Valuation of Long-Term Securities
- Week 10,11Risk and Return
- Week 12,13 Financial Statement Analysis
- Week14,15 : Funds Analysis, Cash-Flow Analysis, and Financial Planning
- Week 16 Capital Budgeting Techniques
- WEEK 17 FINAL TERM EXAMS
- Chapters 9
- Department Economics
- Teacher
Farah Nazir
