1

In the following discussion question you will describe the valuation of securities in the marketplace and the role of risk in the valuation.

How is the return on a security calculated? Is there more than one way to determine this return? How does the marketplace compensate for the risk of a security to determine the selling price of a security? What is the definition of expected return? How does expected return affect risk or the perception of risk?

Question 2

In the following discussion question you will describe the valuation of securities in the marketplace and the role of risk in the valuation.

What are the various theories on market/security risk and how it is measured? Describe the Modern Portfolio Theory and the Capital Asset Pricing Model. What is Beta (in relationship to the stock market)? Which theory/model (of the two) do you feel more accurately describes the valuation of equity securities? Why?