Search Results
Risk Free And Equity Risk Premium
Risk-free rate? The theoretical rate of return for a risk-free investment is known as the risk-free rate of return. However, as all investments involve some level of risk, there is…
Understanding Basic Terms In Fundamental Analysis
[…] much riskier as compared to fixed deposits. This extra risk that you assume when you invest in stocks calls for additional return that you assume over other risk-free (or…
Measuring Risk & Return of Mutual Fund
[…] riskfree security as a benchmark for comparison instead of choosing another performer in the market. Sharpe Ratio = Rp – Rf / standard deviation, where Rf = risk-free return…
Learn About Capital Asset Pricing Model
[…] holding securities. CAPM refers to the manner in which securities are valued in line with their anticipated risks and returns. A risk-averse investor prefers to invest in risk-free securities.…
Alpha
[…] to use the capital assets pricing model, or CAPM for short, to gain a more detailed insight into a portfolio’s performance. With this calculation, you subtract the risk-free rate…
Sharpe Ratio
[…] towards the origin of the CAPM – Capital Asset Pricing Method. Sharpe ratio is derived from the CAPM model. The Sharpe Ratio is the difference between the risk-free return…
Learn About Risk & Expected Return From Stock Market Course
[…] should be a positive real rate of return. The real rate of return is generally equal to the rate of return expected by an investor from a risk-free capital…
Learn About Measurement Of Risk From Stock Market Course
[…] a firm’s equity beta (βE) which, in turn, is a function of both leverage and asset risk (βA): where: KE = firm’s cost of equity RF = risk-free rate…
Understanding Pricing of Futures Contract In Stock Market
[…] representation of how future price change if any of the variables in the market changes. Futures Price = Spot price *(1+ rf – d) Where, rf – risk-free rate…
Learn About Measuring Risk & Return of Mutual Fund
[…] returns. But there are no guarantees. Just as risk means higher potential returns, it also means higher potential losses. On the lower end of the scale, the risk-free rate…