Risk and Return
We examined two very important topics in finance this week: risk and return. To summarize our discussion of the tradeoffs involved with risk and return, view the Evaluating Business Performance: Small Business Case Studies video:
Critically reflect on the importance of the risk and return balance. Consider the following:
Can we ever have any return without some type of risk?
If you take on a large risk, are you guaranteed a large return? Why or why not?
What other factors play into risks that are not covered in the video?
When have you had to consider risk and return in personal or professional decision-making?
Carefully review the Grading Rubric (Links to an external site.)Links to an external site. for the criteria that will be used to evaluate your assignment
Required Resources
Text
Hickman, K. A., Byrd, J. W., & McPherson, M. (2013). Essentials of finance [Electronic version]. Retrieved from https://content.ashford.edu/
Chapter 9: Risk and Return
Chapter 10: Cost of Capital
Multimedia
Khan Academy. (2011). Investment and Consumption (Links to an external site.)Links to an external site.[Video file]. Retrieved from https://www.khanacademy.org/economics-finance-domain/macroeconomics/gdp-topic/GDP-components-tutorial/v/investment-and-consumptionAccessibility Statement does not existPrivacy Policy (Links to an external site.)Links to an external site.
Preston Psych. (2012) What is financial risk (Links to an external site.)Links to an external site.[Video file]. Retrieved from https://www.youtube.com/watch?v=-4mXnFK0ecMAccessibility Statement does not existPrivacy Policy (Links to an external site.)Links to an external site.
Sykes, A. (Producer &Director). (2006). Evaluating business performance: Small business case studies [Video file]. Retrieved from the Films On Demand database. Accessibility Statement (Links to an external site.)Links to an external site. Privacy Policy (Links to an external site.)Links to an external site.
Recommended Resources
Articles
Chen, M. –H. (2003). Risk and return: CAPM and CCAPM (Links to an external site.)Links to an external site.. Quarterly Review of Economics and Finance, 43(2), 369-393. Retrieved from http://jurnalilmiahmanajemen.files.wordpress.com/2011/03/risk-and-return.pdf
Elton, E. J., & Gruber, M. J. (1997). Modern portfolio theory, 1950 to date (Links to an external site.)Links to an external site.. Journal of Banking & Finance, 21(11), 1743-1759. Retrieved from http://pages.stern.nyu.edu/~eelton/papers/97-dec.pdf
Habib, A. (2006). Information risk and the cost of capital: Review of the empirical literature. Journal of Accounting Literature, 25, 127-168. Retrieved from the ProQuest database.
The full-text version of this article can be accessed through the ProQuest database in the Ashford University Library.
Treynor, J. L. (1993). In defense of the CAPM. Financial Analysts Journal, 49(3), 11-11. Retrieved from the ProQuest database.
The full-text version of this article can be accessed through the ProQuest database in the Ashford University Library.
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