Chapter 11 - Chapter 11 Risk and Return Expected Returns...

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05/12/09 Chapter 11: Risk and Return 1 Chapter 11 Risk and Return Expected Returns and Standard Deviation Systematic Risk, Unsystematic Risk and Diversification Measure of Systematic Risk: Beta The Security Market Line (SML) and CAPM
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05/12/09 Chapter 11: Risk and Return 2 Expected Returns and Standard Deviation Conceptual Approach Probability weighted expected return Standard deviation of expected returns
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05/12/09 Chapter 11: Risk and Return 3 Expected Returns and Standard Deviation Example 1 State of Economy Probability Expected Return Good .3 0.40 Fair .4 0.10 Poor .3 -0.20 Calculate expected return and standard deviation of the following security :
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05/12/09 Chapter 11: Risk and Return 4 Expected Returns and Standard Deviation Portfolio Definition Portfolio weights Expected returns and standard deviation
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Chapter 11: Risk and Return 5 Expected Returns and Standard Deviation Example 2 State Prob E(R) Sec A E(R) Sec B Good .3 0.40 -0.10
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Chapter 11 - Chapter 11 Risk and Return Expected Returns...

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