INTRODUCTION People seek security. â¢ The PowerPoint PPT presentation: "Introduction to Finance: Risk and Return" is the property of its rightful owner. Collier and Agyei-Ampomah (2006) note the following. People invest because they hope to get a return from their investment. Find answers and explanations to over 1.2 million textbook exercises. C Dip AF, M Sc. Chapter 2. Introduction This study explores the relationship between risk and return in context of investment and portfolio management. - Title: I. Rates of Return Variation around a central tendency or mean may be presented visually by constructing a histogram as shown on this slide, and studying the dispersion or spread of possible outcomes. Aswath Damodaran. A Brief History of Financial Market Returns Objective. In investing, risk and return are highly correlated. This is for the purpose of identifying the significant hazards, the risk of someone being harmed and deciding what further control measures must be taken to reduce the risk to an acceptable … In investing, risk and return are highly correlated. * Finance Is Fun! MIT SLOAN SCHOOL OF MANAGEMENT 15.414 Class 9 Road map Part 1. Introduction to Risk and Return Where does the discount rate come from? - ... of about 12% per year on average (???? Research has shown that the two are linked in the capital markets and that generally, higher returns can only be achieved by taking on greater risk. In investment, particularly in the portfolio management, the risk and returns are two crucial measures in making investment decisions. Different types of risks include project-specific risk, industry-specific risk, competitive risk, international risk, and market risk. r(X) = Average of top (1-a) ... For each line h, multiply each loss by b. Generates correlation between lines. The concept of financial risk and return is an important aspect of a financial manager's core responsibilities within a business. â¢ Risk as a hazard or threat (downside risk): this is what managers often mean when talking about risk. Find PowerPoint Presentations and Slides using the power of XPowerPoint.com, find free presentations research about Chapter 5 Risk And Return PPT If so, share your PPT presentation slides online with PowerShow.com. Risk Management Parts of a Risk Register Risk Description – Clear description of risk, its cause & consequence Controls / Actions already in place – List what is actually happening now which reduces the impact of a risk or its likelihood Impact – scale of 1 to 5 (1 = minor, 5 = catastrophic) (Note this is to be residual impact only) Distinguish between sales risk and operating risk. Titled Bloomberg Brief Risk, this publication combines original news, data and commentary on topics such as hedging, portfolio allocation and funding strategies. INTRODUCTION TO SECURITIES TRADING AND MARKETS Author: John Last modified by: Reed Elsevier Created Date: 7/28/2012 11:40:52 AM Document presentation format, | PowerPoint PPT presentation | free to view, Incremental Risk Charge (IRC) Introduction, - The incremental risk charge (IRC) is a regulatory requirement from the Basel Committee in response to the financial crisis. This session goes into detail about the relationship between risk and return. Vanguard refers to these types of assets as short-term reserves. Market risk is also called Beta Risk or Non-Diversifiable Risk and is connected with Socio-political & Macroeconomic events that occur on global basis. Define risk and return and show how to measure them by calculating expected return, standard deviation, and coefficient of variation. Joe Molumby B Comm. In real world, we rarely find investors putting their entire wealth into single asset or investment. v. High Risk and. Learners will: • Develop risk and return measures for portfolio of assets • Understand the main insights from modern portfolio theory based on diversification • Describe and identify efficient portfolios that manage risk effectively • Solve for portfolio with the best risk-return trade-offs • Understand how risk preference drive optimal … The level of risk and required rate of return (ror) are directly related. Boasting an impressive range of designs, they will support your presentations with inspiring background photos or videos that support your themes, set the right mood, enhance your credibility and inspire your audiences. What is Return?“Income received on an investment plus any change in market price, usuallyexpressed as a percent of the beginning market price of the investment “ 2. It is not sensible to talk about investment returns without talking about risk, because investment decisions involve a trade-off between the twoâreturn and risk are opposite sides of the same coin.Investors should be âwilling to purchase a particular asset if the expected return is sufficient to compensate risk. This chapter introduces modern portfolio theory in a simpli ï¬ed setting where there are only two risky assets and a single risk-free asset. They are all artistically enhanced with visually stunning color, shadow and lighting effects. Then evolution and development of portfolio theories is given, with special emphasis on Modern Portfolio Theory since 1952. â¦ Fall 2006 c J. Wang 15.401 Lecture Notes 1-10 Introduction to Finance Chapter 1 Example 2. Vanguard refers to these types of assets as short-term reserves. In other words, it is the degree of deviation from expected return. Generally, the more financial risk a business is exposed to, the greater its chances for a more significant financial return. Introduction. Arial arial Symbol MT Symbol Times New Roman Default Design MathType 5.0 Equation Bitmap Image Risk and Return - Part 1 Introduction to VaR and RAROC Risk and Return - Part 1 Introduction to VaR and RAROC Determine Capital Needs for an Insurance Company Volatility Determines Capital Needs Low Volatility Volatility Determines Capital Needs High Volatility Define Risk Coherent Measures of Risk … ADVERTISEMENTS: So far our analysis of risk-return was confined to single assets held in isolation. - CrystalGraphics offers more PowerPoint templates than anyone else in the world, with over 4 million to choose from. Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? Or use it to upload your own PowerPoint slides so you can share them with your teachers, class, students, bosses, employees, customers, potential investors or the world. Six levels of risk for mutual fund schemes: i. vi. Moderately High Risk. The risk-free return is the return required by investors to compensate them for investing in a risk-free investment. Bloomberg Brief Risk also contains interviews with risk officers and portfolio managers at fund companies, corporations and Purchasing power risk. Chapter 5 Risk and Return After studying Chapter 5, you should be able to: Understand the relationship (or “trade-off”) between risk and return. There are three commonly used methodologies to calculate VaR – parametric, historical simulation and Monte Carlo simulation. What is the beta of the risk-free security? PPT – Introduction to Risk and Return PowerPoint presentation | free to download - id: 695889-OTZjM, The Adobe Flash plugin is needed to view this content. iv. Actions. - Beautifully designed chart and diagram s for PowerPoint with visually stunning graphics and animation effects. • The payoff you receive is guaranteed and cannot vary. 5 Risk can be perceived in a number of ways. HAZARD IDENTIFICATION, RISK ASSESSMENT & RISK CONTROL OBJECTIVE To identify types of Hazard in work area To make Risk Assessments To suggest Risk Controls to ... â A free PowerPoint PPT presentation (displayed as a Flash slide show) on PowerShow.com - id: 3b9ced-ODBmO Risk and Return 1. * Finance Is Fun! Sensitivity of a stocks return to the return on, Turbo Charged Seafood has the following returns, When the market was up 1, Turbo average change, When the market was down 1, Turbo average, The average change of 1.6 (-0.8 to 0.8) divided, Diversification reduces unique risk, but not, The beta of a portfolio will be an weighted. • A risk free asset is an investment whose future value is knows with certainty and whose return is the risk free rate of return. 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