Chapter 4 - Risk and Return Stand Alone Risk
- Expected Rate of Return
- The Standard Deviation of Returns
- Coefficient of Variation
Risk in a Portfolio Context
- Portfolio Returns - weighted average of expected returns on the portfolio assets.
- Portfolio Risk
- Correlation of returns over time impacts portfolio risk
- Perfect Correlation - no impact
- Less than perfect correlation will reduce risk.
- Diversifiable vs. Market Risk
- Concept of Beta
- Portfolio Beta
- Weighted average of individual betas
- Security Market Line
Homework |