Understanding Risk and Return 10-1 Introduction Risk is a fundamental component of investing. Risk must be understood and managed. In selecting securities‚ it is important to understand and measure market risk. Then securities can be selected by choosing securities with expected returns that exceed required returns. 10-2 Chapter Objectives To grasp the nature of risk and its sources and to relate risk to investment return To grasp the concepts of required return and expected return and to see
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1.1 INTRODUCTION Every investment is characterised by return and risk. The concept of risk is intuitively understood by investors. In general‚ it refers to the possibility of incurring a loss in a financial transaction. But risk involves much more than that. The word ‘risk’ has a definite financial meaning. The possibility of variation of the actual return from the expected return is termed risk. Corporate securities and government securities constitute important
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The law of diminishing returns only applies in the Short Run‚ when only one factor of production is variable and can be increased. The other factors of production are fixed. Thus as the variable factor of production is increased the marginal product of that factor will rise at first‚ but will at some point begin to fall. Returns to scale can only occur when no factors of production are fixed. If the quantities of all of the factors of production are increased‚ then output will also increase. However
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or so‚ role of Indian insurance and mutual fund industry as a significant financial service in financial market has really been noteworthy. In fact since 1992‚ a number of research studies have underlined the importance of these two in the Indian capital market environment as important investment vehicles. But the existing ‘Behavioral Finance’ studies on factors influencing selection of mutual fund and life insurance schemes are very few and very little information is available about investor perceptions
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expands. A) I is true‚ and II is false. B) I is false‚ and II is true. C) Both I and II are true. D) Both I and II are false. Answer: B Diff: 3 Section: 6.2 41) You operate a car detailing business with a fixed amount of machinery (capital)‚ but you have recently altered the number of workers that you employ per hour. Three employees can generate an average product of 4 cars per person in each hour‚ and five employees can generate an average product of 3 cars per person in each hour
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Risk and Return Analysis Paper FIN 402 Risk and Return Analysis Paper Creating the right balance of securities in a diversified portfolio is crucial to maximizing return and minimize risk. This can be done through analysis of current and past activity of each product. Through a risk assessment‚ return analysis‚ researching the beta of each security‚ and reviewing the average risk and return‚ we can determine the weights of our securities and devise the strongest portfolio to limit risk and
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Why I Decided to Return to School By Samantha Handley Ashford University ENG121 ~ Professor Hale Week 2 Assignment 2 ~ Narrative Essay Why I Decided to Return to School I have many reasons for returning to school‚ to prove the nay sayers in my life wrong‚ running my own domestic violence safe haven‚ earning my Bachelors or law degrees or most importantly‚ showing my daughter that no matter what your circumstances it’s never too late or too
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INTERNAL RATE OF RETURN Many companies wants to have a return on their investment in a few years and begin to evaluate their projects optimistically calculating an internal rate of real return not yielding results in the end. This does not end up being expected by the companies; According to the article the authors John C. Kelleher and Justin J. MacCormack . They suggest that there is a tendency to a risky behavior‚ Companies started to run the risk of creating unrealistic numbers for themselves
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Returning to school 1 Why I decided to return to school Joe Andre King English 121 Dr. Jill D. Mosley‚ PHD June 28‚ 2010 Returning to school 2 Why I decided to return to school Today we are experiencing a recession; that’s making it hard to get a good job with just a high school diploma. I am unemployed at the moment. To many jobs have turned me down for employment. I have decided to return to school; so that I can have better job opportunities. I
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1. Calculating Returns ( LO1‚ CFA1) Suppose you bought 100 shares of stock at an initial price of $ 37 per share. The stock paid a dividend of $ 0.28 per share during the following year‚ and the share price at the end of the year was $ 41. Compute your total dollar return on this investment. Does your answer change if you keep the stock instead of selling it? Why or why not? 2. Calculating Yields ( LO1‚ CFA1) In the previous problem‚ what is the capital gains yield? The dividend yield? What is
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