Return

This document discusses key concepts related to risk and return in investments including expected rate of return, standard deviation, coefficient of variation, variance, covariance, correlation, and beta. It provides an example calculation of rate of return comparing the future and current price of an asset.

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Return

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Nahidul Islam IU

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Return Risk

Expected rate of return Standard Deviation (SD) -σ

Required rate of return Coefficient of Variation (C.V)
Variance
Covariance
Correlation
Beta (β)

Where,

X1 = price at the end of year-1 Similarly X2 = = price at the end of year-2

P1 = Probability of getting X1

Future Price −Current price∨Market price

Rate of Return / Return = x 100
Current price∨Market price

46−40
Rate of Return / Return = x 100 = 15%
40

20−40
R1 = x 100 =
40

30−40
R2 = x 100 =
40

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Return

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Return

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Return Risk

Expected rate of return Standard Deviation (SD) -σ

X1 = price at the end of year-1 Similarly X2 = = price at the end of year-2

Future Price −Current price∨Market price

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