chap_10 - Chapter 10 SOME LESSONS FROM CAPITAL MARKET...

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Chapter 10 SOME LESSONS FROM CAPITAL MARKET HISTORY SLIDES CHAPTER WEB SITES Web sites may be referenced more than once in a chapter. This table just includes the section for the first reference. Chapter Section Web Address Introduction www.mhhe.com/rwj 10.1 finance.yahoo.com www.smartmoney.com/marketmap 10.2 www.globalfindata.com www.bigcharts.com 10.4 www.robertniles.com/stats www.morningstar.com 10.1 Key Concepts and Skills 10.2 Chapter Outline 10.3 Risk, Return and Financial Markets 10.4 Dollar Returns 10.5 Percentage Returns 10.6 Example – Calculating Returns 10.7 The Importance of Financial Markets 10.8 Figure 10.4 10.9 Year-to-Year Total Returns 10.10 Average Returns 10.11 Risk Premiums 10.12 Historical Risk Premiums 10.13 Figure 10.9 10.14 Variance and Standard Deviation 10.15 Example – Variance and Standard Deviation 10.16 Example: Work the Web 10.17 Figure 10.10 10.18 Figure 10.11 10.19 Efficient Capital Markets 10.20 Figure 10.12 10.21 What Makes Markets Efficient? 10.22 Common Misconceptions about EMH 10.23 Strong Form Efficiency 10.24 Semistrong Form Efficiency 10.25 Weak Form Efficiency 10.26 Quick Quiz
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A-121 SOME LESSONS FROM CAPITAL MARKET HISTORY CHAPTER WEB SITES - CONTINUED Chapter Section Web Address 10.5 www.investorhome.com What’s On the Web? money.cnn.com www.stls.frb.org CHAPTER ORGANIZATION 10.1 Returns Dollar Returns Percentage Returns 10.2 The Historical Record A First Look A Closer Look 10.3 Average Returns: The First Lesson Calculating Average Returns Average Returns: The Historical Record Risk Premiums The First Lesson 10.4 The Variability of Returns: The Second Lesson Frequency Distributions and Variability The Historical Variance and Standard Deviation The Historical Record Normal Distribution The Second Lesson Using Capital Market History 10.5 Capital Market Efficiency Price Behavior in an Efficient Market The Efficient Markets Hypothesis Some Common Misconceptions about the EMH The Forms of Market Efficiency ANNOTATED CHAPTER OUTLINE Slide 10.1 Key Concepts and Skills Slide 10.2 Chapter Outline Slide 10.3 Risk, Return and Financial Markets
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CHAPTER 10 A-122 10.1. Returns .A Dollar Returns Income component – direct cash payments such as dividends or interest Price change – loosely, capital gain or loss Total dollar return = income component + capital gain (loss) The decision is unaffected by the decision to sell or hold securities. Slide 10.4 Dollar Returns Lecture Tip, page 292: The issues discussed in this section need to be stressed. Many students feel that if you don’t sell a security, you won’t have to consider the capital gain or loss involved. (This is a common investor’s mistake – holding a loser too long because of reluctance to admit a bad decision was made.) Point out that non- recognition is relevant for tax purposes – only realized income must be reported. However, whether or not you have liquidated the asset is irrelevant when measuring a security’s pre-tax performance. Also, we need to annualize total returns so that we can compare the
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This note was uploaded on 05/01/2009 for the course FINC 106 taught by Professor Dr.nehale during the Spring '09 term at Baptist College of Health Sciences.

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chap_10 - Chapter 10 SOME LESSONS FROM CAPITAL MARKET...

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