TAILIEUCHUNG - Lecture Fundamentals of corporate finance (3/e): Chapter 7 - Robert Parrino, David S. Kidwell, Thomas Bates

Chapter 7, risk and return. After studying this chapter you will be able to: Important bond features and types of bonds, cond values and yields and why they fluctuate, bond ratings and what they mean, the impact of inflation on interest rates, the term structure of interest rates and the determinants of bond yields. | Fundamentals of Corporate Finance, 3/e Robert Parrino, . David S. Kidwell, . Thomas W. Bates, . 1 Copyright© 2015 John Wiley & Sons, Inc. Chapter 7: Risk and Return Learning Objectives Explain the relation between risk and return Describe the two components of a total holding period return, and calculate this return for an asset Explain what an expected return is and calculate the expected return for an asset Explain what the standard deviation of returns is and why it is very useful in finance, and calculate it for an asset Copyright© 2015 John Wiley & Sons, Inc. 3 Learning Objectives Explain the concept of diversification Discuss which type of risk matters to investors and why Describe what the Capital Asset Pricing Model (CAPM) tells us and how to use it to evaluate whether the expected return of an asset is sufficient to compensate an investor for the risks associated with that asset Copyright© 2015 John Wiley & Sons, Inc. 4 Risk and Return Why would a person choose an investment with a higher risk of loss when there is a lower-risk opportunity available? A person will prefer a higher-risk opportunity if the probability of an adequate reward is high enough A higher-risk investment must offer a potential return high enough to make it as attractive as the lower-risk alternative The potential return a person requires depends on the amount of risk – the probability of being dissatisfied with an outcome The Relationship between Risk and Return There is a direct relationship between risk and return The higher the risk, the higher the required rate of return, and possible/expected return People vary in their tolerance to risk, but most people do not like risk Risk Tolerant: those who are willing to take on more risk for more possible reward Risk Averse: those who do not like risk and avoid uncertainty The Relationship between Risk and Return An optimal combination of risk and return is the highest expected return for a given amount of risk An optimal .

• Tài chính doanh nghiệp
• Corporate finance
• Fundamentals of corporate finance
• Capital budgeting decisions
• Capital management
• Financing decisions
• Intermediate corporate finance
• Lecture Intermediate corporate finance
• Tài chính doanh nghiệp
• Corporate valuation
• Value based management
• Business organization
• Financial management
• International corporate finance
• Capital market history
• Raising capital
• Financial leverage
• Financial reporting
• Social welfare
• Forward contracts
• The stock markets
• Basic return concepts
• Portfolio theory
• Bond valuation
• Basic stock valuation
• Accounting for financial management
• Analysis of financial statements
• Financial planning
• Forecasting financial statements
• Capital budgeting
• Decision criteria
• Estimating cash flows
• Real options
• Capital structure decisions
• The levered firm
• Cash management
• Financial distress
• Hedging risk
• Warrants and convertibles
• Principles of corporate finance
• Understanding options
• Valuing options
• Financial analysis
• Financial manager
• Financial institutions