In the start, important terms such as, investment, portfolio management, risk and return are explained with help of examples. a weekly risk e-newsletter launched in June 2011. - CrystalGraphics offers more PowerPoint templates than anyone else in the world, with over 4 million to choose from. vi. Portfolio – Risk and Return . The concept of financial risk and return is an important aspect of a financial manager's core responsibilities within a business. It measures default and credit migration risk at a 99.9% confidence level over a one-year capital horizon. In what follows we’ll define risk and return precisely, investi-gate the nature of their relationship, and find that there are ways to limit exposure to in-vestment risk. Then evolution and development of portfolio theories is given, … They'll give your presentations a professional, memorable appearance - the kind of sophisticated look that today's audiences expect. People invest because they hope to get a return from their investment. Risk and Return Introduction For 9.220, Ter m 1, 2002/03 02_Lecture12.ppt Student Versi on Outline Introduction What is risk? Introduction. This includes both decisions by individuals (and financial institutions) to invest in financial assets, such as common stocks, bonds, and other securities, and decisions by a firm’s managers to invest in physical assets, such as … Chapter Outline Realized and Expected Rates of Return & Risk Objective. Chapter 2. Or use it to upload your own PowerPoint slides so you can share them with your teachers, class, students, bosses, employees, customers, potential investors or the world. Introduction to managing risk Topic Gateway Series . • Risk as a hazard or threat (downside risk): this is what managers often mean when talking about risk. 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OK, to think about risk of return, remember that risk of return, of any asset was the risk free rate plus some risk premium. Research has shown that the two are linked in the capital markets and that generally, higher returns can only be achieved by taking on greater risk. The PowerPoint PPT presentation: "Introduction to Risk and Return" is the property of its rightful owner. Different types of risks include project-specific risk, industry-specific risk, competitive risk, international risk, and market risk. This presentation focuses on Parametric VaR. They are all artistically enhanced with visually stunning color, shadow and lighting effects. Generally, the more financial risk a business is exposed to, the greater its chances for a more significant financial return. The tradeoff between Risk and Return is the principles theme in the investment decisions. r(X) = Average of top (1-a) ... For each line h, multiply each loss by b. Generates correlation between lines. RISK AND RETURN 299 a diversified portfolio of common stocks. Collier and Agyei-Ampomah (2006) note the following. The concept of financial risk and return is an important aspect of a financial manager's core responsibilities within a business. It is referred to as a negative event or threat to the organisation. ii. How much is a risky cash flow in one year with a forecasted value of $1,100 worth now? There are three commonly used methodologies to calculate VaR – parametric, historical simulation and Monte Carlo simulation. Fundamental to the understanding of risk are the concepts of vulnerabilities, assets, and threats. View Chap 2 Risk and return- student.ppt from MAF 651 at Universiti Teknologi Mara. * Finance Is Fun! Risk-o-Meter and its importance. There is very high certainty in the return that will be earned on an investment in money market securities such as … Risk and return • Statistics review • Introduction to stock price behavior Reading • Brealey and Myers, Chapter 7, p. 153 – 165 . Purchasing power risk. Increased potential returns on investment usually go hand-in-hand with increased risk. A Portfolio is a collection of different investments that comprise an investor’s total allocation of funds . Many of them are also animated. If you are already a member to Money Instructor, then click here to sign-in. How many returns are below average? Valuation Part 2. In investing, risk and return are highly correlated. Chapter 1 Introduction to Portfolio Theory Updated: August 9, 2013. • Managing the costs of financing costs (e.g. After you enable Flash, refresh this page and the presentation should play. Discuss the different types of investor attitudes toward risk. Define risk and return and show how to measure them by calculating expected return, standard deviation, and coefficient of variation. - Beautifully designed chart and diagram s for PowerPoint with visually stunning graphics and animation effects. Introduction to Risk and Return concepts. • Reducing cash flow and earnings volatility. 5 Risk can be perceived in a number of ways. The level of risk and required rate of return (ror) are directly related. It measures default and credit migration risk at a 99.9% confidence level over a one-year capital horizon. You can find more information at http://www.finpricing.com/paperList.html, Stochastic Methods in Credit Risk Modelling, Valuation and Hedging Introduction to Credit Risk and Credit Derivatives, - Stochastic Methods in Credit Risk Modelling, Valuation and Hedging Introduction to Credit Risk and Credit Derivatives Tomasz R. Bielecki Northeastern Illinois University, INTRODUCTION TO EXCHANGE RATES AND THE FOREIGN EXCHANGE MARKET. If so, share your PPT presentation slides online with PowerShow.com. Or use it to find and download high-quality how-to PowerPoint ppt presentations with illustrated or animated slides that will teach you how to do something new, also for free. ?=12 ... How many returns are above average? Introduction to managing risk Topic Gateway Series . A portfolio is composed of two or more […] It is a portfolio of all assets in the economy. What is Return?“Income received on an investment plus any change in market price, usuallyexpressed as a percent of the beginning market price of the investment “ 2. - Part 1: Introduction and Overview of Investment A broad map of the territory * S.B.Khatri - AIM * Fund Flows via Intermediary and Market Markets Intermediaries ... Introduction to Financial Futures Markets. Geometric vs. Arithmetic Average Rates of Return Objective. ADVERTISEMENTS: So far our analysis of risk-return was confined to single assets held in isolation. The PowerPoint PPT presentation: "Introduction to Finance: Risk and Return" is the property of its rightful owner. Boasting an impressive range of designs, they will support your presentations with inspiring background photos or videos that support your themes, set the right mood, enhance your credibility and inspire your audiences. Introduction To Financial Management Chapter 1 Finance Is Fun! … PowerShow.com is a leading presentation/slideshow sharing website. In investing, risk and return are highly correlated. Aswath Damodaran. Arial arial Symbol MT Symbol Times New Roman Default Design MathType 5.0 Equation Bitmap Image Risk and Return - Part 1 Introduction to VaR and RAROC Risk and Return - Part 1 Introduction to VaR and RAROC Determine Capital Needs for an Insurance Company Volatility Determines Capital Needs Low Volatility Volatility Determines Capital Needs High Volatility Define Risk Coherent Measures of Risk … • Investors require higher rates of return for increased risk. Incremental Risk Charge (IRC) Introduction - The incremental risk charge (IRC) is a regulatory requirement from the Basel Committee in response to the financial crisis. Vedpuriswar, - Title: Market Risk Modelling Author: vedpurav Keywords Last modified by: Admin Created Date: 7/20/2009 6:33:59 AM Document presentation format: Custom. Positive risk-return relationship: the higher the risk, the higher the average return . The trade-off between risk and return is a key element of effective financial decision making. The Adobe Flash plugin is needed to view this content. Business risk ... - Title: Introduction to Financial Management Author: cob Last modified by: cob Created Date: 8/28/2002 10:15:22 PM Document presentation format: On-screen Show, Enterprise Risk Management For Insurers and Financial Institutions, - Enterprise Risk Management For Insurers and Financial Institutions David Ingram CERA, FRM, PRM From the International Actuarial Association, Review of what we have learned in the last, Incremental cash flows and opportunity cost, Cash flows from the change of working capital, Cash flows from capital investment and disposal, Cash flows from operations revenue cost (cash, Cash flows from operations accounting profit, Now we can apply what we have learned about how, A project costs 2,000 and is expected to last 2, Suppose you buy one share of IBM at 74 this year, What profit do you expect to make for your, What profit do you expect to make for one dollar, Profit per one dollar29.25/740.395 or 39.5, To invest in stocks, investors require a risk, The expected return on a risky security is equal, Expected return risk-free rate risk premium, Risk premium expected return risk-free rate, We can use the variance or the standard deviation, Variance or standard deviation measures weighted, Suppose that there are N states, then the, Stock A has the following returns depending on, First, calculate the mean return or the expected, p1(r1- r-bar)2p2(r2- r-bar)2p3(r3-r-bar)2, Unique Risk - Risk factors affecting only that, Market Risk - Economy-wide sources of risk that, Yes, we can reduce risk by diversification that, Can we understand intuitively why diversification. : what is it, how do we measure it and what we... 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