Category Archives: RISK AND RETURN

Measurement of Risk

Measurement of Risk The risk associated with a single asset is assessed from both a behavioral and a quantitative/statistical point of view. The behavioral view of risk can be obtained by using (i) sensitivity analysis and (ii) probability (distribution). The statistical measures of risk of an asset/security are (1) standard deviation and (2) coefficient of variation, Finance-Assignments.comInstructions Feel

Definition of Return and Risk

Definition of Return and Risk Return The (rate of) return on an asset/investment for a given period, say a year, is the annual income received plus any change in market price, usually expressed as a per cent of the opening market price. Symbolically, the one-period actual (expected) return, R EXAMPLE If the price of a share on April 1 (current year) is Rs 25, the annual dividend received at the end of the year R


RISK AND RETURN INTRODUCTION The two key determinants or share/security prices are expected risk and expected return. The financial managers must understand these concepts as they have a hearing on the share prices as 1 as the valuation of the firm. This Chapter presents a framework for an explicit and quantitative understanding of these concepts and the nature of relationship between them. The subject matter of