Return and risk are the two most important factors to consider when making investment decisions. They are positively related: in order to get higher returns (potential of higher returns), one needs to bear additional risks. However, there is no garanttee that you will have a higher return when taking on higher risk. We have discussed different methods that return and risk can be quantified. Below is the list of suggested topics for our discussion. Please feel free to extend to other related areas as we go along.
1. What is the difference between realized return and expected return? How each can be calculated? How to use these measures in personal investment decisions?
2. How can we compute risks on historical returns? How can we get risks for expected returns?
3. What is the relationship between risk and return historically? What implications does it have on your investment decisions?
4. Observe the stock market performance lately, what lessons can we learn? What's your personal opinion on investing in today's market?
5. Why corporate financial managers should be concerned about their company's stock price performance?