Introduction to risk, return and the historical record - Risk and risk premiums
3 important questions on Introduction to risk, return and the historical record - Risk and risk premiums
What is the holding period return?
(Ending price of a share - Beginning price + Cash dividend) / Beginning price
What is the excess return?
The difference in any particular period between the actual rate of return on a risky asset and the actual risk-free rate.
Why do financial analysts generally assume investors are risk averse?
If the risk premium were zero, people would not be willing to invest any money in stocks.
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