BUSF_A01.qxd

Chapter 6 • Risk in investment appraisal (b) Assuming that the estimates are correct, does this seem a logical price from Focus’ ...

Problems There are sets of multiple-choice questionsand missing-word questions available on the website. These specifically cove ...

Chapter 7 7.1 The relevance of security prices Most of the developed countries of the world have a market in which shares in loc ...

The relevance of security prices The existence of a market that trades in securities at prices that will tend to reflect the exp ...

investment decisions 7 Portfolio theory and its relevance to real 7.2 The expected value/variance (or mean/variance) criterion W ...

7.3 Security investment and risk The expected value/variance criterion (EVC) may be summarised as follows: l where the expected ...

Chapter 7 • Portfolio theory and its relevance to real investment decisions Two features might surprise adherents to the eggs an ...

7.4 Portfolio theory Figure 7.2 The risk /return profiles of three securities, A, B and C Each of the three points represents th ...

Chapter 7 • Portfolio theory and its relevance to real investment decisions * R= Readers who are not too confident with these st ...

Portfolio theory Table 7.1Risk and expected returns for various portfolios of securities A and B with differing assumptions as t ...

Chapter 7 • Portfolio theory and its relevance to real investment decisions with negatively correlated securities. In fact there ...

Portfolio theory Figure 7.4 The risk /return profiles of various portfolios of securities A and B, with differing assumptions re ...

Chapter 7 • Portfolio theory and its relevance to real investment decisions Figure 7.5 The risk /return profiles of various port ...

Portfolio theory Figure 7.6 The efficient frontier Each point along the line EE represents the risk /return profile of some port ...

Chapter 7 • Portfolio theory and its relevance to real investment decisions Figure 7.7 The efficient frontier with borrowing and ...

Portfolio theory tangential to rfSwhere rfSitself is tangential to EE. Investors whose preferences are similar to those of indiv ...

Chapter 7 • Portfolio theory and its relevance to real investment decisions 9.3 Capital market efficiency The line rfSin Figure ...

Capital asset pricing model Table 7.2Betas of three leading UK businesses in January 2008 Rolls-Royce Group plc (engine and gene ...

Chapter 7 • Portfolio theory and its relevance to real investment decisions CAPM was developed by Sharpe (1963), though others i ...

CAPM: an example of beta estimation Estimation of market factors Year Index Return Return deviation Return variance (1) (2) (3) ...