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  • The Returns: J.Kathirvelu

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    J. K
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    The document discusses the relationship between risk and return in investments. It states that higher risk investments have a higher chance of yielding higher returns, while lower risk investments like government securities only yield low returns. It identifies two types of returns - realized and expected returns. Returns have components like current return, capital return, total return, and beta. Traditional and modern methods are used to measure returns, which analyze factors like holding period yield and statistical measures. The relationship between risk and return follows a pattern where return equals the risk-free rate plus a risk premium.

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    The document discusses the relationship between risk and return in investments. It states that higher risk investments have a higher chance of yielding higher returns, while lower risk investments like government securities only yield low returns. It identifies two types of returns - realized and expected returns. Returns have components like current return, capital return, total return, and beta. Traditional and modern methods are used to measure returns, which analyze factors like holding period yield and statistical measures. The relationship between risk and return follows a pattern where return equals the risk-free rate plus a risk premium.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    4 views14 pages

    The Returns: J.Kathirvelu

    Uploaded by

    J. K
    The document discusses the relationship between risk and return in investments. It states that higher risk investments have a higher chance of yielding higher returns, while lower risk investments like government securities only yield low returns. It identifies two types of returns - realized and expected returns. Returns have components like current return, capital return, total return, and beta. Traditional and modern methods are used to measure returns, which analyze factors like holding period yield and statistical measures. The relationship between risk and return follows a pattern where return equals the risk-free rate plus a risk premium.

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    © All Rights Reserved
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    of 14

    THE RETURNS

    Done by,

    J.Kathirvelu
    Meaning of Returns

    • The return from any investment is expectedly consistent


    with the extent of risk assumed by the investor.
    • Risk and return go together.
    • Higher the risk, higher the chances of getting higher return.
    • An investment in a low risk – high safety investment such as
    investment in government securities will obviously get the
    investor only low returns.
    Types of Returns

    1. REALISED RETURN
    2. EXPECTED RETURN
    COMPONENTS OF RETURN

    • CURRENT RETURN
    • CAPITAL RETURN/GAIN
    • TOTAL RETURN
    • BETA
    MEASURING RETURNS
    TRADITIONAL METHOD OF MEASUREMRENT
    a) estimated yield
    b) actual yield
    MODERN METHOD OF MEASUREMRENT
    a) holding period yield
    b) return and statistical yield
    i)central tendency
    ii)measure of dispersion
    RELATION BETWEEN RISK AND RETURN

    1. RETURN AT ZERO RISK


    2. PREMIUM FOR BUSINESS RISK

    RISK-RETURN TRADE OFF:

    RETURN = RISK FREE RATE+RISK PREMIUM

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