Financial Management: Principles and Applications, 13/e

Chapter 8 Risk and Return

Capital Market Theory

Chapter Outline

1. 8.1 Portfolio Returns and Portfolio Risk (pgs. 224–233)

   1. Objective 1. Calculate the expected rate of return and volatility for a portfolio of investments and describe how diversification affects the returns to a portfolio of investments.

2. 8.2 Systematic Risk and the Market Portfolio (pgs. 233–238)

   1. Objective 2. Understand the concept of systematic risk for an individual investment and calculate portfolio systematic risk (beta).

3. 8.3 The Security Market Line and the CAPM (pgs. 238–242)

   1. Objective 3. Estimate the investor’s expected rate of return using the Capital Asset Pricing Model.

Principles and Applied

In this chapter, we will continue our discussion of Principle ...