Behavioral finance; herding; anchoring

    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