Assignment:
Principles of Finance I
Prepare a PowerPoint or Prezi Presentation to define the following terms, using graphs or equations to illustrate your answers where feasible.
1. Risk in general; stand-alone risk; probability distribution and its relation to risk
2. Expected rate of return, ^r
3. Continuous probability distribution
4. Standard deviation, σ; variance, σ2
5. Risk aversion; realized rate of return, r
6. Risk premium for Stock i, RPi; market risk premium, RPM
7. Capital Asset Pricing Model (CAPM)
8. Expected return on a portfolio, r^p; market portfolio
9. Correlation as a concept; correlation coefficient, ρ
10. Market risk; diversifiable risk; relevant risk
11. Beta coefficient, b; average stock's beta
12. Security Market Line (SML); SML equation
13. Slope of SML and its relationship to risk aversion
14. Equilibrium; Efficient Markets Hypothesis (EMH); three forms of EMH
15. Fama-French three-factor model
16. Behavioral finance; herding; anchoring