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Income statement: An income statement is a report that shows how much revenue a company earned over a specific time period (usually for a year or some portion of a year). An income statement also shows the cost and expenses associated with earning that revenue. The literal “bottom line: of the statement usually shows the […]
Statistical measurement of risk The Mean-Variance Framework The Markowitz approach, while powerful and simple, boils investor choices down to two dimensions. The “good” dimension is captured in the expected return on an investment, and the “bad” dimension is the variance or volatility in that return. In effect, the approach assumes that all risk is captured […]
Relationship of Risk and Return There is a positive relationship between risk and return because risk and return are interrelated to each other, higher the return and higher the risk. Rational investor are risk averse because they are willing invest in risky assets with compensate by high return by risk premium. Lower levels of uncertainty […]
Risk Analysis on Common Stock A risk is an uncertainty happening. It is a peril (cause of loss), or a hazard (something that makes the occurrence of a peril more likely or more danger). In other words Risk involves the chance an investment’s actual return will differ from the expected return. Risk is the potential chance of gaining […]