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Lecture 18

FIN 302 Lecture Notes - Lecture 18: Squared Deviations From The Mean, Dividend Yield, Capital MarketPremium


Department
Finance
Course Code
FIN 302
Professor
Qin Lei
Lecture
18

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Capital Market
Dollar return
Total Dollar return = income from investment +gain/loss due to change in price
Chapter Summary
1. Returns
2. Historical Return
3. Average return
4. Variability of returns
5. Capital market efficiency
Percentage returns
1. Dividend yield
=Income/beginning price
2. Capital gains yield
= (end price beginning price)/ begin price
3. Total percentage return
= dividend yield + capital gains yield
4. Po*r = income +(P1-P0)
Risk and Return
There is a reward for bearing risk.
The greater the potential rewards, the greater risk
Risk return tradeoff
Measuring Risk
1. Variance and stv measures volatility
2. The greater the volatility => greater uncertainty
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