Principles of Managerial Finance
220 PART 2 Important Financial Concepts continuous probability distribution A probability distribution showing all the possible ...
CHAPTER 5 Risk and Return 221 standard deviation (k) The most common statistical indicator of an asset’s risk; it measures the ...
222 PART 2 Important Financial Concepts The formula that is commonly used to find the standard deviation of returns, k, in a s ...
CHAPTER 5 Risk and Return 223 TABLE 5.5 The Calculation of the Standard Deviation of the Returns for Assets A and Ba ikj k kjk ...
coefficient of variation (CV) A measure of relative dispersion that is useful in comparing the risks of assets with differing ex ...
CHAPTER 5 Risk and Return 225 LG3 LG4 EXAMPLE When the standard deviations (from Table 5.5) and the expected returns (from Table ...
226 PART 2 Important Financial Concepts The portfolio of a firm, which would consist of its total assets, is not differentiated ...
CHAPTER 5 Risk and Return 227 TABLE 5.7 Expected Return, Expected Value, and Standard Deviation of Returns for Portfolio XY A. E ...
228 PART 2 Important Financial Concepts perfectly positively correlated Describes two positively correlated series that have a c ...
CHAPTER 5 Risk and Return 229 TABLE 5.8 Forecasted Returns, Expected Values, and Standard Deviations for Assets X, Y, and Z and ...
230 PART 2 Important Financial Concepts Identical return streams are used in this example to permit clear illustration of the c ...
CHAPTER 5 Risk and Return 231 TABLE 5.9 Correlation, Return, and Risk for Various Two-Asset Portfolio Combinations Correlation c ...
232 PART 2 Important Financial Concepts political risk Risk that arises from the possibility that a host govern- ment will take ...
CHAPTER 5 Risk and Return 233 The initial development of this theory is generally attributed to William F. Sharpe, “Capital Ass ...
234 PART 2 Important Financial Concepts Nondiversifiable Risk Total Risk Diversifiable Risk Portfolio Risk, σk P 1 5 10 15 20 25 ...
CHAPTER 5 Risk and Return 235 beta coefficient (b) A relative measure of nondiversi- fiable risk. An indexof the degree of movem ...
236 PART 2 Important Financial Concepts Hint Remember that published betas are calculated using historical data. When investors ...
CHAPTER 5 Risk and Return 237 TABLE 5.10 Selected Beta Coefficients and Their Interpretations Beta Comment Interpretation 2.0 Mo ...
238 PART 2 Important Financial Concepts U.S. Treasury bills (T-bills) Short-term IOUs issued by the U.S. Treasury; considered th ...
CHAPTER 5 Risk and Return 239 Although CAPM has been widely accepted, a broader theory, arbitrage pricing theory (APT),first de ...
«
7
8
9
10
11
12
13
14
15
16
»
Free download pdf