Management and Organizational Studies 2310A/B Chapter Notes - Chapter 12: Normal Distribution, Net Present Value, Efficient-Market Hypothesis

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Stacey Hann

Document Summary

Chapter 12 lessons from capital market history. Percentage returns: returns are displayed in percentages. Canada bonds: canada treasury bills: has three month maturity. Calculating average returns: arithmetic average or arithmetic mean return , add up yearly returns and divide by 55. Risk premium: risk premium the excess return required from an investment in a risky asset over a risk-free investment. Frequency distributions and variability: standard deviation the average squared deviation between the actual return and the average return, most common measure of volatility. The historical variance and standard deviation: the bigger the number, the more the actual returns tend to differ from the average return, also the larger the variance or standard deviation is, the more spread out the returns are. Normal distribution: normal distribution a symmetric, bell-shaped frequency distribution that can be defined by its mean and standard deviation, also called bell curve.