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