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The Meaning
and
Measurement of
Risk and Return
Measure Risk:
A common approach is to look at a distribution of
either historic or projected returns and calculate the
volatility(either the standard deviation or variance) of
the returns.
The following slide shows two different “distribution”
© 2011 Pearson Prentice Hall. All rights reserved. 6-8
Measure Risk: volatility
6-15
Portfolio
k=kfr + krp
Where:
CAPM