Explain the difference between average stock returns and risk-free returns

Explain the difference between average stock returns and risk-free returns

Understand how and percentage returns are calculated.

Explain the difference between average stock returns and risk-free returns.

Explain how the Sharpe Ratio is used to manage risk.

Describe the significance of premiums as a method of comparison with other countries.

Describe how variance and standard deviation are used to measure the variability of individual stocks.

Explain how an investor chooses the best portfolio of stock to hold.

Discuss how diversification is used to mitigate risk in the portfolio.

Describe the relationship between risk and expected return (CAPM).

Explain how the risk-free rate, market risk premium and stock beta are used to calculate expected returns using the capital asset pricing model (CAPM).

Explain how cyclicality of revenues and operating leverage help determine beta.

Describe the dividend discount model (DDM) approach and how is it different than CAPM.

Understand how to calculate the weighted average cost of capital to determine the optimum level of debt and equity to finance an investment.

What derivatives are and how are they used to manage risk.

Distinguish between forward contracts and future contracts.

Compare and contrast the various types of swap contracts.


………………….Answer preview………………….

 The total amount that is paid regarding capital gains is mainly dependent on the size of the increases, which is the income tax bracket, and also whether the benefits are long-term or short-term. To calculate the size of the capital gains, it is essential to know the exact prices paid on an asset (EJ Elton, MJ Gruber, 2011)………………


1846 words

Get instant access to the full solution from  by clicking the purchase button below 

We offer the bestcustom writing paper services. We have done this question before, we can also do it for you.

Why Choose Us

  • 100% non-plagiarized Papers
  • 24/7 /365 Service Available
  • Affordable Prices
  • Any Paper, Urgency, and Subject
  • Will complete your papers in 6 hours
  • On-time Delivery
  • Money-back and Privacy guarantees
  • Unlimited Amendments upon request
  • Satisfaction guarantee

How it Works

  • Click on the “Place Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
  • Fill in your paper’s requirements in the "PAPER DETAILS" section.
  • Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
  • Click “CREATE ACCOUNT & SIGN IN” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
  • From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.