taiwan财务管理_lecture9(ch9).pptVIP

Topics Covered Rates of Return 73 Years of Capital Market History Measuring Risk Risk Diversification Thinking About Risk Rates of Return Rates of Return Rates of Return Rates of Return Nominal vs. Real Market Indexes Expected Return Measuring Risk Variance - Average value of squared deviations from mean. A measure of volatility. Standard Deviation - Average value of squared deviations from mean. A measure of volatility. Measuring Risk Coin Toss Game-calculating variance and standard deviation Risk and Diversification Diversification - Strategy designed to reduce risk by spreading the portfolio across many investments. Unique Risk - Risk factors affecting only that firm. Also called “diversifiable risk.” Market Risk - Economy-wide sources of risk that affect the overall stock market. Also called “systematic risk.” Risk and Diversification Risk and Diversification Stock Market Volatility 1926-1998 Risk and Diversification Risk and Diversification The McGraw-Hill Companies, Inc.,2001 9- * Irwin/McGraw-Hill Irwin/McGraw-Hill Chapter 9 Fundamentals of Corporate Finance Third Edition Introduction to Risk, Return, and the Opportunity Cost of Capital Brealey Myers Marcus slides by Matthew Will Irwin/McGraw-Hill The McGraw-Hill Companies, Inc.,2001 Dow Jones Industrial Average (The Dow) Value of a portfolio holding one share in each of 30 large industrial firms. Standard Poor’s Composite Index (The SP 500) Value of a portfolio holding shares in 500 firms. Holdings are proportional to the number of shares in the issues. The Value of an Investment of $1 in 1926 Source: Ibbotson Associates Index Year End Rates of Return 1926-1998 Source: Ibbotson Associates Year Percentage Return Std Dev 2 1 1 1 1 1 2 5 6 8 11 12 13 14 15 16 17