青岛农业大学经济与管理学院财务管理英文课件 chapter6.pptVIP

Introduction to Risk and Return 1. All financial assets are expected to produce cash flows, and the risk of an asset is judged by the risk of its cash flows. 2. Here are two assumptions about risk and return: Assumption (1): The returns from investments are normally distributed. Assumption (2): Investors are risk-averse. 3. The risk of an asset can be considered in two ways: (1) on a stand-alone basis (2) in a portfolio context 4. In a portfolio context, an asset’s risk can be divided into two components: (1) diversifiable risk (2) market risk 5. An asset with a high degree of relevan