Prepare a PowerPoint or Prezi Presentation to define the following terms
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, σ; variance, σ2
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, ρ
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
Solution preview
Risk in general is defined as the probability that some event that is not favourable shall happen. For example, an asset risk is basically the cash flow for the asset will be less the expectation or it shall be unfavorable. A stand-alone risk is just part of the overall risk and refers to the risk of an investment holding only a single asset………………………..
APA
1149 words