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Portfolio Management

Dr. Tahir Khan Durrani

(CEngr, MCIT, ACII, MSc, MPhil, CMBA, PhD)

Dr. Tahir Khan Durrani

• CEngr (Chartered Engineer, Marine Engineering, Singapore)

• MCIT (Chartered Institute of Transport, UK)

• ACII (Chartered Insurance Institute, UK)

• MSc (Insurance & Risk Management, Cass Business School,

London, UK)

• MPhil (Enterprise Risk Management, Cass Business School,

London, UK)

• CMBA (Chartered MBA, Oxford University, UK)

• PhD (Enterprise Risk Management, Irish International University,

Dublin, Ireland)

Dr. Tahir Khan Durrani 1-2

Chapter 1

The Investment Setting

Questions to be answered:

• Why do individuals invest ?

• What is an investment ?

• How do we measure the rate of return on

an investment ?

• How do investors measure risk related to

alternative investments ?

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Dr. Tahir Khan Durrani

Chapter 1

The Investment Setting

• What factors contribute to the rates of

return that investors require on

alternative investments ?

• What macroeconomic and

microeconomic factors contribute to

changes in the required rate of return for

individual investments and investments

in general ?

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Dr. Tahir Khan Durrani

Why Do Individuals

Invest ?

By saving money (instead of

spending it), individuals tradeoff

present consumption for a larger

future consumption.

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Dr. Tahir Khan Durrani

04 . 1 $ % 4 00 . 1 $ = +

How Do We Measure The Rate Of

Return On An Investment ?

• The pure rate of interest is the exchange rate

between future consumption and present

consumption. Market forces determine this rate.

• This interest rate is established in the capital

market by a comparison of the supply of excess

income available (savings) to be invested and the

demand for excess consumption (borrowing) at a

given time.

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Dr. Tahir Khan Durrani

People’s willingness to pay the

difference for borrowing today and

their desire to receive a surplus on

their savings give rise to an interest

rate referred to as the pure time value

of money.

How Do We Measure The Rate Of

Return On An Investment ?

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Dr. Tahir Khan Durrani

If the future payment will be

diminished in value because of

inflation, then the investor will

demand an interest rate higher than

the pure time value of money to

also cover the expected inflation

expense.

How Do We Measure The Rate Of

Return On An Investment ?

8

Dr. Tahir Khan Durrani

If the future payment from the

investment is not certain, the

investor will demand an interest rate

that exceeds the pure time value of

money plus the inflation rate to

provide a risk premium to cover the

investment risk.

How Do We Measure The Rate Of

Return On An Investment ?

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Dr. Tahir Khan Durrani

Defining an Investment

A current commitment of $ for a period

of time in order to derive future

payments that will compensate for:

–the time the funds are committed

–the expected rate of inflation

–uncertainty of future flow of funds.

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Dr. Tahir Khan Durrani

Rate of Return

• The historical rate of return on an individual

investment over the time period the investment is

held (that is, its holding period).

• Given the measures of historical rates of return,

we calculate the traditional measures of risk for a

historical time series of returns (that is, the

variance and standard deviation).

• Following the measures of historical rates of

return and risk, we turn to estimating the

expected rate of return for an investment.

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Dr. Tahir Khan Durrani

Rates of Return

• When we are evaluating alternative investments

for inclusion in our portfolio, we will often be

comparing investments with widely different

prices or lives.

• As an example, we want to compare a $10 stock

that pays no dividends to a stock selling for $150

that pays dividends of $5 a year.

• To properly evaluate these two investments, we

must accurately compare their historical rates of

returns.

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Dr. Tahir Khan Durrani

Rates of Return

• When we invest, we defer current consumption

in order to add to our wealth so that we can

consume more in the future.

• Therefore, when we talk about a return on an

investment, we are concerned with the change

in wealth resulting from this investment. This

change in wealth can be either due to cash

inflows, such as interest or dividends, or caused

by a change in the price of the asset (positive or

negative).

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Dr. Tahir Khan Durrani

Rate of Return Example

• If you commit $200 to an investment at the

beginning of the year and you get back

$220 at the end of the year, what is your

return for the period?

• The period during which you own an

investment is called its holding period, and

the return for that period is the holding

period return (HPR).

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Dr. Tahir Khan Durrani

Measures of

Historical Rates of Return

Holding Period Return

10 . 1

$200

$220

Investment of Value Beginning

Investment of Value Ending

HPR

= =

=

1.1

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Dr. Tahir Khan Durrani

Historical Rate of Return

• This value will always be zero or greater—that

is, it can never be a negative value.

• A value greater than 1.0 reflects an increase in

your wealth, which means that you received a

positive rate of return during the period. A value

less than 1.0 means that you suffered a decline in

wealth, which indicates that you had a negative

return during the period.

• An HPR of zero indicates that you lost all your

money.

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Dr. Tahir Khan Durrani

Historical Rate of Return

• Although HPR helps us express the change in

value of an investment, investors generally

evaluate returns in percentage terms on an

annual basis. This conversion to annual

percentage rates makes it easier to directly

compare alternative investments that have

markedly different characteristics.

• The first step in converting an HPR to an annual

percentage rate is to derive a percentage return,

referred to as the holding period yield (HPY).

The HPY is equal to the HPR minus 1.

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Dr. Tahir Khan Durrani

Measures of

Historical Rates of Return

Holding Period Yield

HPY = HPR - 1

1.10 - 1 = 0.10 = 10%

1.2

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Dr. Tahir Khan Durrani

Annual Holding Period Return

–Annual HPR = HPR

1/n

where n = number of years investment is held

Annual Holding Period Yield

–Annual HPY = Annual HPR - 1

Measures of

Historical Rates of Return

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Dr. Tahir Khan Durrani

Holding Period Return

• Consider an investment that cost $250 and is

worth $350 after being held for two years, then

HPR is as follows;

• If you experience a decline in your wealth value,

the computation is as follows;

• A multiple year loss over two years would be

computed as follows;

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Dr. Tahir Khan Durrani

Mean Rates of Returns

• Over a number of years, a single investment will likely

give high rates of return during some years and low

rates of return, or possibly negative rates of return,

during others. Your analysis should consider each of

these returns, but you also want a summary figure that

indicates this investment’s typical experience, or the

rate of return you should expect to receive if you owned

this investment over an extended period of time.

• You can derive such a summary figure by computing

the mean annual rate of return for this investment over

some period of time.

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Dr. Tahir Khan Durrani

Measures of Historical Returns

• Given a set of annual rates of return (HPYs) for

an individual investment, there are two

summary measures of return performance.

• The first is the arithmetic mean return, the

second is the geometric mean return.

• To find the arithmetic mean (AM), the sum

(Σ) of annual HPYs is divided by the number

of years (n) as follows:

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Dr. Tahir Khan Durrani

Measures of

Historical Rates of Return

Arithmetic Mean

1.4

yields period holding

annual of sum the HPY

: where

HPY/ AM

¿

¿

=

= n

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Dr. Tahir Khan Durrani

Measures of

Historical Rates of Return

Geometric Mean

1.5

| |

( ) ( ) ( )

n

n

HPR HPR HPR

: follows as returns period holding

annual the of product the

: where

1 HPR GM

2 1

1

×

=

÷ =

t

t

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Dr. Tahir Khan Durrani

Measures of Historical Returns

• Investors are typically concerned with long-term

performance when comparing alternative investments.

• GM is considered a superior measure of the long-term

mean rate of return because it indicates the compound

annual rate of return based on the ending value of the

investment versus its beginning value.

• Although the arithmetic average provides a good

indication of the expected rate of return for an

investment during a future individual year, it is biased

upward if you are attempting to measure an asset’s long-

term performance.

• This is obvious for a volatile security.

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Dr. Tahir Khan Durrani

A Portfolio of Investments

The mean historical rate of return

for a portfolio of investments is

measured as the weighted average

of the HPYs for the individual

investments in the portfolio.

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Computation of Holding

Period Yield for a Portfolio

# Begin Beginning Ending Ending Market Wtd.

Stock Shares Price Mkt. Value Price Mkt. Value HPR HPY Wt. HPY

A 100,000 10 $ 1,000,000 $ 12 $ 1,200,000 $ 1.20 20% 0.05 0.010

B 200,000 20 $ 4,000,000 $ 21 $ 4,200,000 $ 1.05 5% 0.20 0.010

C 500,000 30 $ 15,000,000 $ 33 $ 16,500,000 $ 1.10 10% 0.75 0.075

Total 20,000,000 $ 21,900,000 $ 0.095

21,900,000 $

20,000,000 $

HPY = 1.095 - 1 = 0.095

= 9.5%

HPR = = 1.095

Exhibit 1.1

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Dr. Tahir Khan Durrani

Expected Rates of Return

• Risk is uncertainty that an

investment will earn its expected

rate of return, the investor assigns

probability values to all possible

returns.

• Probability is the likelihood of an

outcome

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Dr. Tahir Khan Durrani

Expected Rates of Return

• These probability values range from zero,

which means no chance of the return, to

one, which indicates complete certainty

that the investment will provide the

specified rate of return.

• These probabilities are typically subjective

estimates based on the historical

performance of the investment or similar

investments modified by the investor’s

expectations for the future.

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Dr. Tahir Khan Durrani

Expected Rates of Return

¿

=

×

=

n

i 1

i

Return) (Possible Return) of y Probabilit (

) E(R Return Expected

) R (P .... ) )(R (P ) )(R [(P

n n 2 2 1 1

+ + +

) )(R P (

1

i i

n

i

¿

=

1.6

30

Dr. Tahir Khan Durrani

Risk Aversion

The assumption that most investors

will choose the least risky

alternative, all else being equal and

that they will not accept additional

risk unless they are compensated in

the form of higher return

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Dr. Tahir Khan Durrani

Probability Distribution

• Let us begin our analysis of the effect of risk with

an example of perfect certainty wherein the

investor is absolutely certain of a return of 5 %.

• Perfect certainty allows only one possible return,

and the probability of receiving that return is 1.0.

Few investments provide certain returns.

• In the case of perfect certainty, there is only one

value for PiRi:

• E(Ri) = (1.0)(0.05) = 0.05

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Dr. Tahir Khan Durrani

Probability Distributions

Risk-free Investment

0.00

0.20

0.40

0.60

0.80

1.00

-5% 0% 5% 10% 15%

Exhibit 1.2

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Dr. Tahir Khan Durrani

Probability Distribution

• suppose an investor believed an investment could provide

several different rates of return depending on different possible

economic conditions.

• As an example, in a strong economic environment with high

corporate profits and little or no inflation, the investor might

expect the rate of return on common stocks during the next year

to reach as high as 20 %.

• In contrast, if there is an economic decline with a higher-than-

average rate of inflation, the investor might expect the rate of

return on common stocks during the next year to be –20 %.

• Finally, with no major change in the economic environment, the

rate of return during the next year would probably approach the

long-run average of 10 %.

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Dr. Tahir Khan Durrani

Probability Distributions

Risky Investment with 3 Possible Returns

0.00

0.20

0.40

0.60

0.80

1.00

-30% -10% 10% 30%

Exhibit 1.3

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Dr. Tahir Khan Durrani

Probability Distribution

• A third example is an investment with 10

possible outcomes ranging from –40 % to

50 % with the same probability for each

rate of return.

• In this case, there are numerous outcomes

from a wide range of possibilities.

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Dr. Tahir Khan Durrani

Probability Distributions

Risky investment with ten possible rates of return

0.00

0.20

0.40

0.60

0.80

1.00

-40% -20% 0% 20% 40%

Exhibit 1.4

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Dr. Tahir Khan Durrani

Measuring risk of expected rate of

return

• Variance and standard deviation measure the

dispersion of possible rates of return around the

expected rate of return.

• The larger the variance for an expected rate of

return, the greater the dispersion of expected

returns and the greater the uncertainty, or risk, of

the investment.

• In perfect certainty, there is no variance of return

because there is no deviation from expectations

and, therefore, no risk or uncertainty.

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Dr. Tahir Khan Durrani

Measuring the Risk of

Expected Rates of Return

2

n

1 i

Return) Expected - Return (Possible y) Probabilit (

) ( Variance

×

¿

=

= o

2

i i i

1

)] E(R )[R P ( ÷

¿

=

n

i

1.7

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Dr. Tahir Khan Durrani

Measuring the Risk of

Expected Rates of Return

Standard Deviation is the square

root of the variance

1.8

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Dr. Tahir Khan Durrani

Relative Variability

• If conditions for two or more investment alternatives

are not similar—that is, if there are major

differences in the expected rates of return—it is

necessary to use a measure of relative variability to

indicate risk per unit of expected return.

• A widely used relative measure of risk is the

coefficient of variation (CV).

• This measure of relative variability and risk is used

by financial analysts to compare alternative

investments with widely different rates of return and

standard deviations of returns.

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Dr. Tahir Khan Durrani

Measuring the Risk of

Expected Rates of Return

Coefficient of Variation (CV) a measure of

relative variability that indicates risk per unit

of return

Standard Deviation of Returns

Expected Rate of Returns

E(R)

i

o

=

1.9

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Dr. Tahir Khan Durrani

Measuring the Risk of

Historical Rates of Return

variance of the series

holding period yield during period I

expected value of the HPY that is equal

to the arithmetic mean of the series

the number of observations

2/n

n

1 i

i

2

HPY) ( E HPY [

¿

=

÷ = o

=

=

=

=

n

E(HPY)

HPY

i

2

o

1.10

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Dr. Tahir Khan Durrani

Determinants of

Required Rates of Return

• Time value of money

• Expected rate of inflation

• Risk involved

• The summation of these three components is

called the required rate of return.

• This is the minimum rate of return that you

should accept from an investment to compensate

you for deferring consumption.

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Dr. Tahir Khan Durrani

Determinants of

Required Rates of Return

• The analysis and estimation of the required rate

of return are complicated by the behavior of

market rates over time.

– First, a wide range of rates is available for alternative

investments at any time.

– Second, the rates of return on specific assets change

dramatically over time.

– Third, the difference between the rates available (that

is, the spread) on different assets changes over time.

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Dr. Tahir Khan Durrani

The Real Risk Free Rate

(RRFR)

• Assumes no inflation.

• Assumes no uncertainty about future cash

flows.

• Influenced by time preference for

consumption of income and investment

opportunities in the economy

• This RRFR of interest is the price charged

for the exchange between current goods and

future goods.

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Dr. Tahir Khan Durrani

The Real Risk Free Rate (RRFR)

• Two factors, one subjective and one objective,

influence this exchange price.

• The subjective factor is the time preference of

individuals for the consumption of income.

• The objective factor that influences the RRFR is

the set of investment opportunities available in

the economy.

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Dr. Tahir Khan Durrani

The Real Risk Free Rate (RRFR)

• The investment opportunities are determined in

turn by the long-run real growth rate of the

economy.

• A rapidly growing economy produces more and

better opportunities to invest funds and

experience positive rates of return.

• A change in the economy’s long-run real growth

rate causes a change in all investment

opportunities and a change in the required rates of

return on all investments.

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Dr. Tahir Khan Durrani

The Real Risk Free Rate (RRFR)

• Just as investors supplying capital should

demand a higher rate of return when growth

is higher, those looking for funds to invest

should be willing and able to pay a higher

rate of return to use the funds for investment

because of the higher growth rate.

• Thus, a positive relationship exists between

the real growth rate in the economy and the

RRFR.

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Dr. Tahir Khan Durrani

The Real Risk Free Rate (RRFR)

• Nominal rates of interest that

prevail in the market are

determined by real rates of interest,

plus factors that will affect the

nominal rate of interest, such as the

expected rate of inflation and the

monetary environment.

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Dr. Tahir Khan Durrani

Adjusting For Inflation

Real RFR =

1

Inflation) of Rate (1

RFR) Nominal 1 (

÷

(

¸

(

¸

+

+

1.12

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Dr. Tahir Khan Durrani

NRFR Dependence

• Conditions in the Capital Markets

– The cost of funds at any time (the interest

rate) is the price that equates the current

supply and demand for capital. A change in

the relative ease or tightness in the capital

market is a short-run phenomenon caused by a

temporary disequilibrium in the supply and

demand of capital.

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Dr. Tahir Khan Durrani

NRFR Dependence

– Disequilibrium could be caused by an unexpected

change in monetary policy (for example, a change

in the growth rate of the money supply) or fiscal

policy (for example, a change in the federal

deficit).

– Such a change in monetary policy or fiscal policy

will produce a change in the NRFR of interest,

– But the change should be short-lived because, in

the longer run, the higher or lower interest rates

will affect capital supply and demand.

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Dr. Tahir Khan Durrani

NRFR Dependence

• Expected Rate of Inflation

–If investors expected the price level to

increase during the investment period,

they would require the rate of return

to include compensation for the

expected rate of inflation.

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Dr. Tahir Khan Durrani

NRFR Dependence

• The Common Effect

– All the factors regarding the required rate of return

affect all investments equally. Whether the investment

is in stocks, bonds, real estate, or machine tools,

– If the expected rate of inflation increases from 2% to

6%, the investor’s required rate of return for all

investments should increase by 4%.

– Similarly, if a decline in the expected real growth rate

of the economy causes a decline in the RRFR of 1%,

the required return on all investments should decline

by 1%.

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Dr. Tahir Khan Durrani

Adjusting For Inflation

Nominal RFR =

(1+Real RFR) x (1+Expected Rate of Inflation) – 1

• Most investors require higher rates of

return on investments if they perceive that

there is any uncertainty about the expected

rate of return. This increase in the required

rate of return over the NRFR is the risk

premium (RP).

1.11

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Facets of Fundamental Risk

• Business risk

• Financial risk

• Liquidity risk

• Exchange rate risk

• Country risk

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Dr. Tahir Khan Durrani

Business Risk

• Uncertainty of income flows caused by

the nature of a firm’s business

• Sales volatility and operating leverage

determine the level of business risk.

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Dr. Tahir Khan Durrani

Financial Risk

• Uncertainty caused by the use of debt

financing.

• Borrowing requires fixed payments which

must be paid ahead of payments to

stockholders.

• The use of debt increases uncertainty of

stockholder income and causes an increase

in the stock’s risk premium.

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Dr. Tahir Khan Durrani

Liquidity Risk

• Uncertainty is introduced by the secondary

market for an investment.

– How long will it take to convert an investment

into cash?

– How certain is the price that will be received?

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Dr. Tahir Khan Durrani

Exchange Rate Risk

• Uncertainty of return is introduced by

acquiring securities denominated in a

currency different from that of the investor.

• Changes in exchange rates affect the

investors return when converting an

investment back into the ―home‖ currency.

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Dr. Tahir Khan Durrani

Country Risk

• Political risk is the uncertainty of returns

caused by the possibility of a major change

in the political or economic environment in

a country.

• Individuals who invest in countries that

have unstable political-economic systems

must include a country risk-premium when

determining their required rate of return

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Dr. Tahir Khan Durrani

Risk Premium

f (Business Risk, Financial Risk,

Liquidity Risk, Exchange Rate Risk,

Country Risk)

or

f (Systematic Market Risk)

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Dr. Tahir Khan Durrani

Risk Premium and Portfolio Theory

• The relevant risk measure for an individual asset is

its co-movement with the market portfolio

• Systematic risk relates the variance of the

investment to the variance of the market

• Beta (β) measures this systematic risk of an asset.

• The risk premium for an individual earning asset

is a function of the asset’s systematic risk with the

aggregate market portfolio of risky assets. The

measure of an asset’s systematic risk is referred to

as its beta:

• Risk Premium = f (Systematic Market Risk)

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Dr. Tahir Khan Durrani

Fundamental Risk

versus Systematic Risk

• Fundamental risk comprises business risk,

financial risk, liquidity risk, exchange rate

risk, and country risk

• Systematic risk refers to the portion of an

individual asset’s total variance attributable

to the variability of the total market portfolio

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Dr. Tahir Khan Durrani

Security Market Line (SML)

• Investors increase their required rates of return as

perceived risk (uncertainty) increases. The line that

reflects the combination of risk and return available

on alternative investments is referred to as the

security market line (SML).

• The SML reflects the risk-return combinations

available for all risky assets in the capital market at

a given time. Investors would select investments that

are consistent with their risk preferences; some

would consider only low-risk investments, whereas

others welcome high-risk investments.

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Dr. Tahir Khan Durrani

Relationship Between

Risk and Return

Exhibit 1.7

Rateof Return

Risk

(business risk, etc., or systematic risk-beta)

RFR

Security

Market Line

Low

Risk

Average

Risk

High

Risk

The slope indicates the

required return per unit of risk

(Expected)

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Dr. Tahir Khan Durrani

Changes in the Required Rate of Return

Due to Movements Along the SML

Rate

Risk

(business risk, etc., or systematic risk-beta)

RFR

Security

Market Line

Expected

Movements along the curve

that reflect changes in the

risk of the asset

Exhibit 1.8

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Dr. Tahir Khan Durrani

Changes in the Slope of the SML

RP

i

= E(R

i)

- NRFR

where:

RP

i

= risk premium for asset i

E(R

i)

= the expected return for asset i

NRFR = the nominal return on a risk-free asset

1.13

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Dr. Tahir Khan Durrani

Market Portfolio Risk

• The market risk premium for the market

portfolio (contains all the risky assets in the

market) can be computed:

RP

m

= E(R

m

)- NRFR where:

RP

m

= risk premium on the market portfolio

E(R

m

) = expected return on the market

portfolio

NRFR = expected return on a risk-free asset

1.14

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Dr. Tahir Khan Durrani

Market Portfolio Risk

• Market RP is not constant because the

slope of the SML changes over time.

• Although we do not understand

completely what causes these changes in

the slope, we do know that there are

changes in the yield differences between

assets with different levels of risk even

though the inherent risk differences are

relatively constant.

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Dr. Tahir Khan Durrani

Market Portfolio Risk

• A significant change in the yield spread

during a period where there is no major

change in the risk characteristics of Baa

bonds relative to Aaa bonds would imply a

change in the market RP.

• Change in the RP implies a change in the

slope of the SML. An increase in the

market risk premium means an increase in

the slope of the market line.

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Dr. Tahir Khan Durrani

Change in

Market Risk Premium

Exhibit 1.10

Risk

RFR

Original SML

New SML

Rm

Rm'

E(R)

NRFR

Expected Return

R

m´

R

m

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Dr. Tahir Khan Durrani

Market Portfolio Risk

• Exhibit 1.11 shows what happens to the SML when there

are changes in one of the following factors:

1) Expected real growth in the economy,

2) Capital market conditions, or

3) The expected rate of inflation.

• An increase in expected real growth, temporary tightness

in the capital market, or an increase in the expected rate of

inflation will cause the SML to experience a parallel shift

upward.

• The parallel shift occurs because changes in expected real

growth or in capital market conditions or a change in the

expected rate of inflation affect all investments, no matter

what their levels of risk are.

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Dr. Tahir Khan Durrani

Capital Market Conditions,

Expected Inflation, and the SML

Exhibit 1.11

Risk

RFR

Original SML

New SML

Rate of Return

RFR'

NRFR

NRFR´

Expected Return

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Dr. Tahir Khan Durrani

HPY Question

• At the beginning of last year, you invested

$4,000 in 80 shares of the Chang Corporation.

During the year, Chang paid dividends of $5 per

share. At the end of the year, you sold the 80

shares for $59 a share.

• Compute your total HPY on these shares and

indicate how much was due to the price change

and how much was due to the dividend income.

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Dr. Tahir Khan Durrani

HPY Answer

• $4,000 used to purchase 80 shares = $50 per share

Therefore: HPY (Total) = HPY (Price Increase) + HPY (Div)

.280 = .180 + HPY (Div)

.10 = HPY (Dividends) = 10%

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Dr. Tahir Khan Durrani

28% .280 1 - 1.280 1 - HPR HPY

280 . 1

000 , 4

120 , 5

000 , 4

400 720 , 4

000 , 4

80) x (5 80) x (59

HPR

= = = =

= =

+

=

+

=

18% .180 1 - 1.180 Alone) Increase (Price HPY

180 . 1

000 , 4

720 , 4

4,000

80 x 59

Alone) Increase (Price HPR

= = =

= = =

Real Rate of Return Question

• During the past year, you had a portfolio that contained U.S.

government T-bills, long-term government bonds, and

common stocks. The rates of return on each of them were as

follows:

– U.S. government T-bills 5.50%

– U.S. government long-term bonds 7.50%

– U.S. common stocks 11.60%

• During the year, the consumer price index, which measures

the rate of inflation, went from 160 to 172 (1982–1984 =

100).

• Compute the rate of inflation during this year.

• Compute the real rates of return on each of the investments in

your portfolio based on the inflation rate.

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Dr. Tahir Khan Durrani

Real Rate of Return Answer

•

79

Dr. Tahir Khan Durrani

0381 . 1 0381 . 1 1

1.075

1.1160

Stocks Common U.S.

0 1

1.075

1.075

bonds LT Government U.S.

0186 . 1 9814 . 1

1.075

1.055

Bills - T Government U.S.

1

inflation of rate 1

HPR

Return of Rate Real

075 .

160

12

160

160 - 172

Inflation of Rate

Index Price Consumer the CPI where

CPI

CPI CPI

Inflation of Rate . 9

n

n 1 n

= ÷ = ÷ =

= ÷ =

÷ = ÷ = ÷ =

÷

+

=

= = =

=

÷

=

+

The Internet

Investments Online

www.financecenter.com

www.investorama.com

www.moneyadvisor.com

www.investorguide.com

www.finweb.com

www.aaii.org

www.wsj.com

www.cob.ohio-state.edu/dept/fin/osudata.htm

www.ft.com

www.fortune.com

www.money.com

www.forbes.com

www.worth.com

www.barrons.com

80

Dr. Tahir Khan Durrani

Future Topics

Chapter 2

• The asset allocation decision

• The individual investor life

cycle

• Risk tolerance

• Portfolio management

81

Dr. Tahir Khan Durrani

- Chapter 6 - Sources of Information on Global Investments
- Chapter 3 - Selecting Investments in a Global Market
- Chapter 9 - An Introduction to Asset Pricing Models
- Chapter 11 - An Introduction to Derivative Markets and Securities
- Chapter 8 - An Introduction to Portfolio Management
- Chapters 20, 22 & 24
- Chapter 4 - Organization and Functioning of Securities Markets
- BUS 306 Exam 1_ Spring 2011(b)_Solution by Mateev
- Chapter 1 - The Investment Setting
- Chapter 12 - Analysis of Financial Statements
- investment
- Chapter 7 - Efficient Capital Markets
- Chapter 2 - The Asset Allocation Decision
- Chapter 10 - Extensions and Testing of Asset Pricing Theories
- Chapter 5 - Security Market Indicator Series
- Cap 1
- The Cost of Capital
- Problems
- Dollar Rupee
- Corporate Finance
- Orbis Equity Annual Reports 2011
- Macroeconomics Basic Topics
- Karle Term Sheet reviced track 28.07.08.doc
- Value Investor Insight Issue 336[1]
- Final Project
- Integrative Case 1 - Merit Enterprise Corp
- Business Evaluation Guide
- Fin 550
- Workshop Sc3
- aa

- Guide to Foreign Direct Investment in Korea
- G20 Seoul Summit 2010
- 2014.12 IceCap Global Market Outlook
- The Federal Reserve Dont Let It Be Misunderstood
- Investment Environment & Business Opportunities - Your Wise and Profitable Choice
- living legends
- T2 Partners Berkshire Hathaway
- Third Point Q1'09 Investor Letter
- Pershing Square IV Letter to Investors
- Viking Q2 Letter
- Byron Wien's Commentary on Pequot Closing
- Third Point Q4 Investor Letter TPOI
- Israel Englander Keynote Address
- Third Point Q2 2014
- Presentation
- 20110228FundPerformanceActive (2)
- Certificate in Accounting Level 2/series 3-2009
- 12-13-16 Total Return Webcast Slides
- Maverick Capital Q4 2009 Letter
- Sustainable Investment in India 2009
- Form 8960 Instructions
- Utimco Active
- Goldman's Lloyd Blankfein Testimony to Lawmakers
- Guide to Living in Korea 2010
- Inside Job - The Documentary That Cost $20,000,000,000,000 to Produce
- Wedbush November Report
- NYU's Memo Opposing Merkin Motion to Dismiss
- Graham Doddsville Winter 2017
- York Capital's Letter to Investors
- Forbes on Warren Buffett

- Behavioral Finance
- Mutual Funds Herding and Its Impact on Stock Returns; Evidence From Pakistan
- Inefficient Markets
- CAPM VS Behavioral Finance
- Service Quality
- Analysis of Financial Statements
- Corporate Governance Case Studies
- Financial Management Quiz
- Analysis of Financial Statements L2
- Choosing Research Topic in Business Administration for M
- Analysis of Financial Statements L5
- Financial Institutions
- Multinational Capital Budgeting
- CG Lecture3
- From Capital Market Efficiency To Behavioral Finance
- Security Markets - Stochastic Models
- Foundations of Finance
- International Business Environment
- 275
- Financial Management And Policy
- Why Are Artists Poor?
- Corporate Governance Lec 2
- Total Quality Management
- Corporate Governance
- Principles of Total Quality
- Theory and Practice of Corporate Governance
- 1037
- Applied Econometrics
- Corporate Governance

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