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    Juliana Molejon
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    Risk is considered low if an outcome is known with certainty, and higher if there is potential for loss. It can be measured by the uncertainty of outcomes. Variance and standard deviation help identify how widely investment outcomes vary around the average, with higher variation indicating less predictability and more risk. Return has two parts - regular cash flows like interest/dividends, and changes in asset price known as capital gains or losses. Total return compares the amount invested to all cash received by an investor over a time period.

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    Risk is considered low if an outcome is known with certainty, and higher if there is potential for loss. It can be measured by the uncertainty of outcomes. Variance and standard deviation help identify how widely investment outcomes vary around the average, with higher variation indicating less predictability and more risk. Return has two parts - regular cash flows like interest/dividends, and changes in asset price known as capital gains or losses. Total return compares the amount invested to all cash received by an investor over a time period.

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    1 views5 pages

    Presentation 7

    Uploaded by

    Juliana Molejon
    Risk is considered low if an outcome is known with certainty, and higher if there is potential for loss. It can be measured by the uncertainty of outcomes. Variance and standard deviation help identify how widely investment outcomes vary around the average, with higher variation indicating less predictability and more risk. Return has two parts - regular cash flows like interest/dividends, and changes in asset price known as capital gains or losses. Total return compares the amount invested to all cash received by an investor over a time period.

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    of 5

    C0NCEPT AND

    MEASUREMENT
    OF RISK
    CONCEPT AND MEASUREMENT OF RISK

    • It is regarded as riskless if an outcome


    is known with certainty.
    • If an investment has a potential for loss,
    it would be considered risky
    • Risk can be described as a measurement
    of the uncertainty
    CONCEPT AND MEASUREMENT OF RISK

    • Measurements of dispersion such as


    variance and standard deviation can
    assist identify how spread out
    investment outcomes are around their
    mean or average value. The bigger
    the variation, the more unpredictable
    the set of values is, and the riskier
    they are.
    CONCEPT AND
    MEASUREMENT OF RETURN
    CONCEPT AND MEASUREMENT OF RETURN

    • The return has two parts: the fundamental part,


    or the regular cash flows from the investment,
    either in the form of interest or dividends, and
    the variation in asset price, often known as
    capital gain or loss.
    • The total return on an asset over the holding
    period compares the amount of money invested
    in the asset to all of the cash flows received by
    an investor during any given time period.

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