risk-free rate of return (return on government securities) from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. {draw:line} {draw:frame} {draw:frame} Sharpe Ratio = Where rp = Expected portfolio rate of return rf = Risk free rate of return σp = Portfolio standard deviation Since standard deviation is a measure of the associated risk (systematic + unsystematic) of a portfolio‚ it helps to evaluate whether the portfolio’s returns are due to
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Introduction to Financial Management Chapter 5 Risk and Rates of Return FIN 254 (Instructor- Saif Rahman) Introduction to Risk and Return Risk and return are the two most important attributes of an investment. Research has shown that the two are linked in the capital markets and that generally‚ higher returns can only be achieved by taking on greater risk. Risk isn’t just the potential loss of return‚ it is the potential loss of the entire investment itself (loss of
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aa(){return function(){}}function ba(a){return function(){return this[a]}}var q;function r(a‚b‚c){a=a.split(".");c=c||u;!(a[0]in c)&&c.execScript&&c.execScript("var "+a[0]);for(var d;a.length&&(d=a.shift());)!a.length&&ca(b)?c[d]=b:c=c[d]?c[d]:c[d]={}}fu nction da(a‚b){for(var c=a.split(".")‚d=b||u‚e;e=c.shift();)if(d[e]!=l)d=d[e];else return l;return d}function ea(a){a.i=function(){return a.tc?a.tc:a.tc=new a}} function fa(a){var b=typeof a;if("object"==b)if(a){if(a instanceof Array)return"array";if(a
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INVESTMENT & PORTFOLIO MANAGEMENT FIN3IPM TUTORIAL ANSWERS TUTORIAL 1: INTRODUCTION CHAPTER 1: QUESTION 1 a The process of investment concerns the purchase of assets which will provide a future return to allow for future consumption or further investment. Individuals have to make choices between current and future consumption and because their pattern of income does not always match their pattern of consumption‚ they are required to make investments. Throughout an individual’s life
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to examine and test the January Effect as a trading strategy. The January Effect is well documented in the literature since Rozeff and Kinney (RK) 1976. Their study showed share returns appear to be abnormally high in January in the United States. In Australia‚ Brown et al (BKKM) 1983 demonstrated that ASX share returns peak in January and July. This trend appears to persist over time and markets across the world so it could be an exploitable trading strategy‚ taking advantage of market inefficiency
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Contents 1.0 Introduction 1 2.0 Objective 2 3.0 Methodology 3 4.0 Graphical Plot For New Index 4 5.0 Performance Analysis 6 5.1 NASDAQ 6 5.2 RUSSELL 7 5.3 S&P 500 8 5.5 NYSE ARCA MINI-OIL INDEX 10 6.0 Conclusion 11 7.0 Reference 12 1.0 Introduction People on Wall Street found it difficult to analyze the daily jumble of up-a-quarter and down-an-eight‚ or whether stocks generally were raising‚ falling or staying even. Charles Dow a journalist devised his stock
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The Risk and Return of Venture Capital John H. Cochrane1 Graduate School of Business‚ University of Chicago March 19‚ 2004 School of Business‚ University of Chicago‚ 1101 E. 58th St. Chicago IL 60637‚ 773 702 3059‚ john.cochrane@gsb.uchicago.edu. I am grateful to Susan Woodward‚ who suggested the idea of a selection-bias correction for venture capital returns‚ and who also made many useful comments and suggestions. I gratefully acknowledge the contribution of Shawn Blosser‚ who assembled the
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increase in risk they require an increase in return True 2) IF a person required return decreases for an increase in risk that person is said to be Risk-Seeking 3.) Risk aversion is the behavior exhibited by managers who require a greater than proportional _________ (a) increase in return‚ for a given decrease in risk. (b) increase in return‚ for a given increase in risk. (c) decrease in return‚ for a given increase in risk. (d) decrease in return‚ for a given decrease in risk. 4.)On Average
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The Apple returns as response to whole market return and IBM return as explanatory variables gives the following regression equation : a. Apple Return = 0.0048 + 1.31 (Whole Market Return) + 0.22 (IBM Return) b. Both the variables have a VIF below 10 however after accounting for standard error both do not contain zero hence they are significant variables and explain the variation in apple returns by 21.13 percent which is the value of adjusted R square for the mentioned model. c. Therefore‚ the
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annual returns of the fund and coming up with a conclusion based on the results of the findings. Analysis of the previous ten years’ annual returns will be used to analyze the risk and return of the mutual fund and propose suitable conclusions pertaining to future investments in the mutual funds. The mutual fund under consideration has not displayed a consistent upward or downward trend. It seems that market forces and the external environment have played a great role in influencing the returns of the
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