文档介绍：6
Corporate Financial Management 3e
Emery Finnerty Stowe
Risk and Return: Stocks
Learning Objectives
Calculate average realized returns for a security.
Estimate expected returns from securities and portfolios.
Estimate the standard deviation of returns on securities and for portfolios.
Explain why diversification is beneficial.
Describe the efficient frontier and the Capital Market Line.
Chapter Outline
Historical Security Returns in the United States
Probability and Statistics
Expected Return and Specific Risk
Investment Portfolios
A Prescription for Investing
Risk and Return and the Principles of Finance
Diversification
Invest in a group of assets, a portfolio, to reduce your total risk.
Risk-Return Trade-Off
Invest in the risky market portfolio and the riskless asset in amounts that provide the risk level you choose.
Efficient Capital Markets
A security’s risk and retired return can be inferred from its past realized returns.
Incremental Benefits
The incremental benefits from owning a stock are its expected future cash flows.
Risk and Return and the Principles of Finance
Time-Value-of-Money
The value of a security is the present value of its expected future cash flows.
Two-Sided Transactions
Use a security’s fair price pute its expected return because a fair price does not favor either side of the transaction.
Self-Interested Behavior
Prices are set by the highest bidder.
Valuable Ideas
Look for ideas that might add value to the market.
Historical Security Returns in the United States
Compute Peter’s realized return from his investment in mon shares.
Three months ago, Peter Lynch purchased 100 shares of RST Corp. for $50 per share. Last month, he received dividends of $ per share from RST. These shares are worth $56 each today.
Holding Period Return
The Holding Period is a length of time over which the asset’s percentage return puted.
In this case, the holding period is 3 months.
The realized holding period return is a