对外经济贸易大学投资学.pptxVIP

Lecture 3 Risk and Return第一页，共二十九页。 Key Concepts and SkillsKnow how to calculate the return on an investmentUnderstand the historical returns on various types of investmentsUnderstand the historical risks on various types of investments第二页，共二十九页。 Risk, Return and Financial MarketsWe can examine returns in the financial markets to help us determine the appropriate returns on non-financial assetsLessons from capital market historyThere is a reward for bearing riskThe greater the potential reward, the greater the riskThis is called the risk-return trade-off第三页，共二十九页。 Dollar ReturnsTotal dollar return = income from investment + capital gain (loss) due to change in priceExample:You bought a bond for $950 one year ago. You have received two coupons of $30 each. You can sell the bond for $975 today. What is your total dollar return?Income = 30 + 30 = 60Capital gain = 975 – 950 = 25Total dollar return = 60 + 25 = $85第四页，共二十九页。 Percentage ReturnsIt is generally more intuitive to think in terms of percentages than in dollar returnsDividend yield = income / beginning priceCapital gains yield = (ending price – beginning price) / beginning priceTotal percentage return = dividend yield + capital gains yield第五页，共二十九页。 Example – Calculating ReturnsYou bought a stock for $35 and you received dividends of $1.25. The stock is now selling for $40.What is your dollar return?Dollar return = 1.25 + (40 – 35) = $6.25What is your percentage return?Dividend yield = 1.25 / 35 = 3.57%Capital gains yield = (40 – 35) / 35 = 14.29%Total percentage return = 3.57 + 14.29 = 17.86%第六页，共二十九页。 Compound returnConventions for quoting rates of return :Usually we use APR, annual percentage rate APR=per-period rate*periods per yearSometimes we use EAR(effective annual rate) In continuous time, EAR=eAPR-1 St=S0ert, so rate of return equal Ln(St/S0) 第七页，共二十九页。 Rate of Return-exampleSuppose you buy T-bill maturing in one month for $9,900. HPR=(10000-9900)/9900=1.01%APR=1.01%*12=12.12%EAR=(1+1.01%)12