Unit 2: Risk – Return Analysis
Concepts of Return and Risk
Concepts of Return Definition: Return represents the total gain or loss experienced on an inves...
Types of Return: Absolute Return
Calculation and Utility The fundamental understanding of investment returns lies in how to determ...
Types of Return: Average Return (Arithmetic Mean)
Average return, specifically the arithmetic mean, is a commonly used measure to summarize investm...
Types of Return: Expected Return (Probability-Weighted Average)
Expected return is a more forward-looking measure than the simple average return. It tries to inc...
Types of Return: Holding Period Return (HPR)
Holding Period Return (HPR) is a straightforward metric that measures the total return generated ...
Types of Return: Effective Annualized Return (EAR)
The Effective Annualized Return (EAR) is designed to provide a comparable annual rate of return w...
Types of Return: Portfolio Return (Weighted Average)
Portfolio return is a fundamental concept in investment management, as it represents the overall ...
Risk-Adjusted Return Measures
Evaluating Performance Beyond Simple Returns Raw return figures only tell part of the story. To m...
Causes (or Sources) and Types of Risk
A Comprehensive Analysis Understanding the different types and sources of risk is crucial for eff...
Calculation of Total, Systematic, and Unsystematic Risk
Quantifying Investment Risk 1. Total Risk: Definition: Represents the overall variability or u...
Impact of Taxes and Inflation on Investment
A Realistic View of Returns 1. Computation of Post-Tax Return Explanation: Tax on investment g...