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