Risk and Return

Contents
=> Risk and return go together
=> Probability distribution of all possible outcomes in terms of return
=> Measuring risk so as to expect adequate return – Weighted average return, Standard deviation and the Co-efficient of variation
=> Risk in a portfolio context – introduction to a portfolio of securities
=> Types of risk associated with investment in a portfolio – systemic and non-systemic
=> Concept of Beta and Capital Asset Pricing Model
=> Volatility and Risk
=> Some concerns about Beta and the CAPM
=> Numerical exercises in risk and return

At the end of the chapter the student will be able to
=> Determine standard deviation and co-efficient of variation for a set of returns
=> Measure degree of risk associated with an investment through volatility in returns over a period of time of a chosen investment
=> Determine the diversifiable and non-diversifiable risks in the context of “portfolio”
=> Apply Capital Asset Pricing Model and find out the cost of equity in a chosen stock through “Beta”

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