Textbook Notes (367,753)
Canada (161,369)
Commerce (1,683)
Chapter

13.docx

2 Pages
126 Views
Unlock Document

Department
Commerce
Course
COMMERCE 2FA3
Professor
Kevin Brewer
Semester
Winter

Description
Commerce 2FA3 Chapter 13: Return, Risk, and Security Market Line Expected Returns and Variances Expected Return - Return on a risky asset expected in the future Risk premium= Expected Return – Risk free rate E(R)= Sum [OXP] O- The value of the outcome P- The probability of occurrence Portfolios - Group of assets such as stocks and bonds held by an investor Portfolio Weights - Percentage of a portfolio’s total value in a particular asset PW= Asset price/total worth Portfolio Expected Returns ER= PWX E(Rl) How much you expect your money to earn Announcements, surprises, and expected returns Expected and unexpected returns Total return= Expected return + Unexpected return R= E(R) + U Announcement= Expected part + Surprise Risk: Systematic and unsystematic Systematic and Unsystematic Risk Systematic risk: A risk that influences a large number of assets. Also called market risk Unsystematic risk: A risk that affects at most a small number of assets. Also called unique or asset specific risks Actual return= E(R) + U U Systematic portion + unsystematic portion m-systematic E-unsystematic Diversification and Portfolio Risk Principle of diversification: Principle stating that spreading an investment across a number of assets eliminates some, but not all, of the risk Diversification and Unsystematic Risk - Unsystematic risk is essentially eliminated by diversification, so a relatively large portfolio has almost no unsystematic risk Diversification and Systematic Risk - Non diversifiable - Total risk= Systematic risk + Unsystematic Risk Systematic Risk and Beta Systematic risk principle: Princi
More Less

Related notes for COMMERCE 2FA3

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit