Ch 6: Risk and rates ofreturn Return Risk o 2002. Prentice Hall. Inc
Ch 6: Risk and Rates of Return Return Risk © 2002, Prentice Hall, Inc
Chapter 6: Objectives Inflation and rates of return How to measure risk (variance, standard deviation, beta) How to reduce risk (diversification) How to price risk (security market line, CAPM)
Chapter 6: Objectives • Inflation and rates of return • How to measure risk (variance, standard deviation, beta) • How to reduce risk (diversification) • How to price risk (security market line, CAPM)
Inflation, Rates of return, and the Fisher Effect Interest Rates
Inflation, Rates of Return, and the Fisher Effect Interest Rates
Conceptually. Interest rates
Interest Rates Conceptually:
Conceptually. Interest rates Nominal risk-free Interest Rate krf
Interest Rates Conceptually: Nominal risk-free Interest Rate krf
Conceptually. Interest rates Nominal risk-free Interest Rate krf
Interest Rates Conceptually: Nominal risk-free Interest Rate krf =
Conceptually. Interest rates Nominal Real risk-free risk-free Interest Interest Rate Rate krf k
Interest Rates Conceptually: Nominal risk-free Interest Rate krf = Real risk-free Interest Rate k*
Conceptually. Interest rates Nominal Real risk-free risk-free Interest Interest+ Rate Rate krf k
Interest Rates Conceptually: Nominal risk-free Interest Rate krf = Real risk-free Interest Rate k* +
Conceptually. Interest rates Nominal Real Inflation risk-free risk-free isk Interest Interest+ premium Rate Rate IRP krf k
Interest Rates Conceptually: Nominal risk-free Interest Rate krf = Real risk-free Interest Rate k* + Inflationrisk premium IRP
Conceptually. Interest rates Nominal Real Inflation risk-free risk-free isk Interest Interest+ premium Rate Rate IRP Krf k Mathematically
Conceptually: Nominal risk-free Interest Rate krf = Real risk-free Interest Rate k* + Inflationrisk premium IRP Mathematically: Interest Rates