FIN 010 Lecture Notes - Lecture 13: Probability Distribution, Weighted Arithmetic Mean, Santa Barbara City College

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9 Jan 2021

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It shows the total risk that is associated with a particular venture derived from historical data. Low sd means number are a very close range, High sd means numbers are spread out. The shadowed area is the probability, approximately 68%, that return on company x is between -0. 06% and 60. 06%. Measuring risk: standard deviation (forecasted data- apply probability) Measuring risk: coefficient of variation (standardizing measure of risk) Lower cv is better option, as this means that there is a lower risk but high return. Useful in investments where risk and expected returns differ. Portfolio return is the weighted average return of constituents. A combination or collection of investment securities. Tina has a self-managed superannuation fund which holds three hypothetic stocks, bba. ax, wew. ax and tlt. ax. Annual returns of tina"s three stocks between 2011 and 2015 are given. Risk of tina"s portfolio same procedure as cba. A combination or collection of financial assets. In the same asset class (e. g. share portfolio)

Related Questions

Fill in the blank using a number of terms listed below (@1 point per question).

Beta coefficient, Bonds, CAPM, Cash flows, Change, CV, Convertible bonds, Correlation, Correlation coefficient, Debenture, Discount, Diversifiable risk, Expected return, Interest rate risk, Inverted, Junk Bonds, Market risk, More, Normal, Opposite, Probability distribution, Ratings, Reinvestment rate risk, Risk, Risk averse investor, Risk premium, Standard deviation

When interest rates move up or down, bond prices move in the _________________ direction.

_____________ are referred to as non-amortized debt, which means interest is paid regularly during the term, usually semiannually, whereas repayment of principal does not occur until the maturity date.

The longer a bond has to maturity, _______________ sensitive the bondâs price is to changes in market interest rates. This is called ________________________.

Bonds with short maturities expose investors to high ____________________, which is the risk that income from a bond portfolio will decline because cash flows received from bonds will be rolled over at lower interest rates.

A bond with an annual coupon payment of $100 originally sold at par for $1,000. Market interest rates are currently 12%. This bond would be selling at a _____________ in order to compensate the purchaser for the below market coupon rate.

Once a bond has been issued, if the holder of the bond retains it until maturity the market value of the bond may ________________, but the ________________ will not.

An unsecured bond is referred to as a(n) __________________.

____________________ can generally be issued at somewhat lower interest rates than regular bonds.

Double-B and lower bonds are speculative, to be called _______________.

Bonds are assigned _____________ that reflect the probability of their going into default. The higher it is, the lower its risk and therefore its interest rate.

When the yield curve slopes upward, it is said to be _______________, because it is like this most of the time. Conversely, a downward-slopping yield curve is termed ______________.

FIN 010 Lecture Notes - Lecture 13: Probability Distribution, Weighted Arithmetic Mean, Santa Barbara City College

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