Prepare a PowerPoint or Prezi Presentation to define the following terms, using graphs or equations to illustrate your answers where feasible.
• Risk in general; stand-alone risk; probability distribution and its relation to risk
• Expected rate of return, ^r
• Continuous probability distribution
• Standard deviation, σ; variance, σ2
• Risk aversion; realized rate of return, r
• Risk premium for Stock i, RPi; market risk premium, RPM
• Capital Asset Pricing Model (CAPM)
• Expected return on a portfolio, r^p; market portfolio
• Correlation as a concept; correlation coefficient, ρ
• Market risk; diversifiable risk; relevant risk
• Beta coefficient, b; average stock’s beta
• Security Market Line (SML); SML equation
• Slope of SML and its relationship to risk aversion
• Equilibrium; Efficient Markets Hypothesis (EMH); three forms of EMH
• Fama-French three-factor model
• Behavioral finance; herding; anchoring
