Risk And Return
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Risk And Return
Presented by: Khyati Goradia Mallika Mahajan Pradeep mundra Kinjal Patel Govind Zawar Sandeep Mishra
Meaning • Risk It is the viability of actual retun from the expected return associated with a given asset. • Return it is the actual income received plus any change in market price of an asset/investment.
Return •
r = Dt+(Pt-Pt1 P(t-1) Dt =annual income dividend received Pt=security price at time t (closing) Pt-1=security price at time period t-1 (opening)
• Current yeild= Dividend Opening price • Capital gains=Closing price opening price
Measurement of Risk Measurement of Risk
Quantitative
Standard Deviation
Coefficient of Variation
Behavioral
Sensitivity Analysis
Probability (Distribution)
RISK & RETURN OF A PORTFOLIO • Portfolio is a collection, combination or group of assets or securities • Portfolio expected return E(rp) = Σwi E(ri) E(rp) = Expected return from portfolio wi = Proportion invested in asset i E(ri) = Expected return for asset i n = Number of Assets in portfolio
PORTFOLIO RISK & CORRELATION 1. Perfect positive correlation 2. Perfect negative correlation 3. Zero correlation Naïve Diversification Markowitz Diversification
Presented by: Khyati Goradia Mallika Mahajan Pradeep mundra Kinjal Patel Govind Zawar Sandeep Mishra
Meaning • Risk It is the viability of actual retun from the expected return associated with a given asset. • Return it is the actual income received plus any change in market price of an asset/investment.
Return •
r = Dt+(Pt-Pt1 P(t-1) Dt =annual income dividend received Pt=security price at time t (closing) Pt-1=security price at time period t-1 (opening)
• Current yeild= Dividend Opening price • Capital gains=Closing price opening price
Measurement of Risk Measurement of Risk
Quantitative
Standard Deviation
Coefficient of Variation
Behavioral
Sensitivity Analysis
Probability (Distribution)
RISK & RETURN OF A PORTFOLIO • Portfolio is a collection, combination or group of assets or securities • Portfolio expected return E(rp) = Σwi E(ri) E(rp) = Expected return from portfolio wi = Proportion invested in asset i E(ri) = Expected return for asset i n = Number of Assets in portfolio
PORTFOLIO RISK & CORRELATION 1. Perfect positive correlation 2. Perfect negative correlation 3. Zero correlation Naïve Diversification Markowitz Diversification
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