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What is the general rule in choosing among alternative investment in greater the risk taken?
The higher the risk the more return you could possibly get. The lower risk investments usually do not make you as big of a return.
What kind of surface is a sphere?
At the risk of being tautological, the answer is SPHERICAL.
How do you calculate treynor ratio in Excel?
calculate the effective return (mean return minus the risk free rate) divided by the beta. the excel spreadsheet in the related link has an example.
How do you make QUADAS-2 risk of bias graph like this one?
To create a QUADAS-2 risk of bias graph, you start by assessing the studies included in your systematic review using the QUADAS-2 tool, which evaluates four key domains: patient selection, index test, reference standard, and flow and timing. For each study, you determine the risk of bias (low, unclear, or high) for each domain and the applicability concerns. You can then input this data into a graphing tool or software, like R or Excel, to visually represent the risks across studies, often using color coding for clarity. Finally, label your axes and add a legend to make the graph easily interpretable.
How do you calculate sortino ratio?
The Sortino Ratio is the actual return minus the target return, all divided by the downside risk. The downside risk is either calculated by the semi standard deviation, or the 2nd order lower partial moment. The related link "Calculate the Sortino Ratio with Excel" provideds an Excel spreadsheet to calculate the Sortino Ratio
How do you calculate risk - free return?
Risk free rate of return or risk free return is calculated as the return on government securities of the same maturity.
Basic concept of risk and return?
The higher the risk, the higher the return.
Relationship between risk and return?
risk is pre-stage for return...
What is the graph of the efficient frontier?
The Efficient Frontier is a graph that shows the portfolio (combination of stocks and bonds) that would give you the highest return at each level of risk. Any point above that is unattainable without a change in risk, any point below is inefficient (that is you could receive greater return for that mix of stocks and bond then you are currently receiving).
How does capital market line differ from security market line?
From Investopedia.com: The capital market line (CML) is a line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio. The CML is derived by drawing a tangent line from the intercept point on the efficient frontier to the point where the expected return equals the risk-free rate of return. The CML is considered to be superior to the efficient frontier since it takes into account the inclusion of a risk-free asset in the portfolio. The capital asset pricing model (CAPM) demonstrates that the market portfolio is essentially the efficient frontier. This is achieved visually through the security market line (SML). The security market line is a line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky marketable securities. The SML essentially graphs the results from the capital asset pricing model (CAPM) formula. The x-axis represents the risk (beta), and the y-axis represents the expected return. The market risk premium is determined from the slope of the SML. The security market line is a useful tool in determining whether an asset being considered for a portfolio offers a reasonable expected return for risk. Individual securities are plotted on the SML graph. If the security's risk versus expected return is plotted above the SML, it is undervalued because the investor can expect a greater return for the inherent risk. A security plotted below the SML is overvalued because the investor would be accepting less return for the amount of risk assumed.
What is risk return relationship?
The risk return relationship is a business concept referring to the risk involved in exchange for the amount of return gained on an investment. These two factors are directly proportional to each other, meaning the more return sought, the higher the risk that is undertaken.
Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
What does the risk return trade off mean?
additional risk is not taken unless there is an additional compensation or return is expected
How is the potential rate of return on investments related to the level of risk?
Higher risk investments have a higher potential return.
What is the risk-free rate if the expected return is 20.4 and beta is 1.6 and expected market return is 15?
expected market return = risk free + beta*(market return - risk free) So by putting in values: 20.4 = rf+ 1.6(15-rf) expected market return = risk free + beta*(market return - risk free) So by putting in values: 20.4 = rf+ 1.6(15-rf) where rf = risk free 20.4 - 24 = rf - 1.6rf -3.6 = -0.6rf rf = 6
The market risk premium is measured by?
The market risk premium is measured by the market return less risk-free rate. You can calculate the market risk premium as market risk premium is equal to the expected return of the market minus the risk-free rate.
What is the relationship between financial decision making and risk and return Would all financial managers view risk-return trade-offs similarly?
return is a reward gained from investing or the reward from employing assets in a company. risk is the degree of uncertainty of possible return generated from an investment
