CHAPTER 6
Risk and Return
1
Topics in Chapter
Basic return and risk concepts
Stand-alone risk
Portfolio (market) risk
Risk and return: CAPM/SML
2
What are investment
returns?
Investment returns measure the
financial results of an investment.
Returns may b
MBA602 Financial Management
Project Corporate Valuation
Introduction
In this project you are asked to choose and value a publicly traded, dividend-paying, nonfinancial U.S. company (preferably a company you are working for or have worked for, or a
close c
12/7/2012
Chapter:
Problem:
6
15
a. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then
calculate average returns over the five-year period. (Hint: Remember, returns are calculated by
subtracting the beginnin
Tool Kit for Risk, Return, and the Capital Asset Pricing Model
STAND-ALONE RISK
The relationship between risk and return is a fundamental axiom in finance. Generally speaking, it is totally logical to assume that
investors are only willing to assume addit
Tool Kit for Risk, Return, and the Capital Asset Pricing Model
STAND-ALONE RISK
The relationship between risk and return is a fundamental axiom in finance. Generally speaking, it is totally logical to assume that
investors are only willing to assume addit
A
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Tool Kit for Time Value of Money Analysis
This spreadsheet model uses Excel to do the calculation
12/7/2012
Chapter:
Problem:
4
35
a. Find the FV of $1,000 invested to earn 10% annually 5 years from now. Answer this
question by using a math formula and also by using the Excel function wizard.
Inputs:
Formula:
Wizard (FV):
PV =
I/YR =
N =
FV = PV(1+I)^
12/7/2012
Chapter:
Problem:
4
35
a. Find the FV of $1,000 invested to earn 10% annually 5 years from now. Answer this
question by using a math formula and also by using the Excel function wizard.
Inputs:
Formula:
Wizard (FV):
PV =
I/YR =
N =
FV = PV(1+I)^