RISK AND RETURN

KELOMPOK 4

 Agus Wirahadi Kusuma (402)

 Muhammad Iqro Fani (411)
 Arvinda Dyah Kusuma D. (424)
 Lulus Istikharoh (435)
 Ilham Wahyu P. (578)
 RISK AND RETURN
FUNDAMENTAL
 Risk Defined
 In the most basic sense, risk is a measure of the uncertainty surrounding the return
that an investment will earn.
 Return Defined
 The total rate of return is the total gain or loss experienced on an investment over a
given period.

 Risk Preferences
 Different people react to risk in different ways. Economist use three categories to
describe how investors respond to risk:
▪ - Risk Averse
▪ - Risk Neutral
▪ - Risk Seeking
 RISK OF A SINGLE ASSET
 Risk Assessment
 Scenario Analysis
▪ An approach for assessing risk that uses several possible alternative outcomes
(scenarios) to obtain a sense of the variability among returns.
 Probability Distributions
▪ A model that relates probabilities to associated outcomes.
 Risk Measurement
 Standard Deviation
▪ It measures the dispersion of an investment’s return around the expected
return.
 Cofficient of Variation: Trading Off Risk and Return
▪ A measure of relative dispersion that is useful in comparing the risks of assets
with differing expected returns.
 RISK OF A PORTFOLIO
 Portfolio Return and Standard Defiation

 Correlation
 A statistical measure of the relationship between any two series of
numbers.
 Diversification
 Combining negatively correlated assets to reduce, or diversify,
risk.
 International Diversification
 Return from International Diversification
 Risk from International Diversification
Risk and Return : The Capital Asset
Pricing Model (CAPM)
 The Capital Asset Pricing Model (CAPM)
 The basic theory that links risk and return for all assets.
 Types Risk
Total security risk = Nondiversifiable risk + Diversifiable risk

 The Model : CAPM

 Beta Coefficient
 The Equation
 The Graph: The Security Market Line (SML)
 Shifts In The Security Market Line
 THANK YOU
ANY QUESTION?