Get Started with Vocabulary Match each of the following terms below with its definition This refers to movement in prices or return and inestors are A. Risk (See Section 8-2) most concerned about the chance that an unfavorable event B. Stand-Alone Risk (See Section 8-2) might occur. This is the price or return fluctuations in a single asset. This is C. Histogram relevant when an investor holds only one stock, for example. D. Risk Aversion (Section 8-2E) Measured using the standard deviation, which captures the E. Risk Premium variability in returns or prices F. Expected Return (Section 8-2A) A list of possible outcomes and the statistical likelihood of each G. Probability Distribution (See Section 8-2A) outcome The rate of return that is expeced from an investment based on H. Coefficient of Variation = standard deviation divided by expected return the likelihood of different outcomes 1. Realized Rate of Return Actual Gain or Loss over a period of time expressed as a percentage This measures captures the risk per unit of return (calculation of this measure will not be on the quiz) Refers to the concepts that investors are can be induced to invest only if the expected return is worth the risk Empirical Research suggests this concept to be accurate across investors on average Imagine a risk-free asset. Investments that involve additional risk include additional expected return. This is the name for the "extra" return that is due to taking "extra" risk (Section 8-2E) See Figure 8-2, probability distributions are often discrete (not continuous). These outcomes and probabilites are shown using this type of plot (click for hint) Get Started with Vocabulary Match each of the following terms below with its definition This refers to movement in prices or return and inestors are A. Risk (See Section 8-2) most concerned about the chance that an unfavorable event B. Stand-Alone Risk (See Section 8-2) might occur. This is the price or return fluctuations in a single asset. This is C. Histogram relevant when an investor holds only one stock, for example. D. Risk Aversion (Section 8-2E) Measured using the standard deviation, which captures the E. Risk Premium variability in returns or prices F. Expected Return (Section 8-2A) A list of possible outcomes and the statistical likelihood of each G. Probability Distribution (See Section 8-2A) outcome The rate of return that is expeced from an investment based on H. Coefficient of Variation = standard deviation divided by expected return the likelihood of different outcomes 1. Realized Rate of Return Actual Gain or Loss over a period of time expressed as a percentage This measures captures the risk per unit of return (calculation of this measure will not be on the quiz) Refers to the concepts that investors are can be induced to invest only if the expected return is worth the risk Empirical Research suggests this concept to be accurate across investors on average Imagine a risk-free asset. Investments that involve additional risk include additional expected return. This is the name for the "extra" return that is due to taking "extra" risk (Section 8-2E) See Figure 8-2, probability distributions are often discrete (not continuous). These outcomes and probabilites are shown using this type of plot (click for hint)
