Chapter 2 Terms

Chapter 2 Terms - asset. Beta: Market risk premium: Risk...

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Paul Ramirez Chapter 2 List of Terms Return vs Risk: Finance theory assumes that a rational investor prefers to receive a higher percentage return on an investment to a lower return, and would rather accept less risk than more risk in earning that return. Mean reversion: The tendency for measures o performance such as percentage rates of return to revert to their historical averages. Efficient Capital Markets: A market that efficiently processes information. Capital Asset Pricing Model: Estimates the rate of return an investor should expect to receive on a risky
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Unformatted text preview: asset. Beta: Market risk premium: Risk Aversion: An investor prefers less risk to more risk. To a risk averse investor, the pain of losing a dollar is greater than the pleasure of winning a dollar. Simple average: Compound average: Time value of money: Time and the value of money are inversely related. Present value: Future value: Compounding: Discounting: Modern portfolio theory: Asset allocation: Efficient frontier: Systematic risk: Unsystematic risk: Diversification:...
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This note was uploaded on 09/16/2009 for the course ACCTG 471 taught by Professor Muthannette during the Fall '08 term at Penn State.

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Chapter 2 Terms - asset. Beta: Market risk premium: Risk...

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