Description

PowerPoint Presentation

Prepare a PowerPoint or Prezi Presentation to define the following terms, using graphs or equations to illustrate your answers where feasible.

Risk in general; stand-alone risk; probability distribution and its relation to risk

Expected rate of return, ^r

Continuous probability distribution
Standard deviation, ?; variance, ?2
Risk aversion; realized rate of return, r
Risk premium for Stock i, RPi; market risk premium, RPM
Capital Asset Pricing Model (CAPM)
Expected return on a portfolio, r^p; market portfolio

Correlation as a concept; correlation coefficient, ?

Market risk; diversifiable risk; relevant risk

Beta coefficient, b; average stock’s beta
Security Market Line (SML); SML equation

Slope of SML and its relationship to risk aversion

Equilibrium; Efficient Markets Hypothesis (EMH); three forms of EMH
Fama-French three-factor model
Behavioral finance; herding; anchoring

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