for those who r studying the subject related to financial market .

1. Risk and Return

4. Computing the Basic Statistics A security analyst has prepared the following probability distribution of the possible returns on the common stock shares of two companies: Compu-Graphics Inc. (CGI) and Data Switch Corp. (DSC).

5. The Mean For CGI, the mean (or expected) return is: Similarly, the mean return for DSC is 24.00%

6. The Variance and Standard Deviation The variance of CGI’s returns is: The Standard Deviation of CGI’s return is:

7. The Covariance The covariance of the returns on CGI and DSC is:

8. The Correlation Coefficient The correlation coefficient between CGI and DSC is:

9. Summary of Results for CGI and DSC

11. Portfolio Expected Return and Risk Expected Return Risk The Expected Returns of the Securities The Portfolio Weights The Risk of the Securities The Portfolio Weights The Correlation Coefficients

12. Portfolio Weights and Expected Return

13. Portfolio Expected Return and Risk

16. Consider stocks of two companies, X and Y. The table below gives their expected returns and standard deviations . Plot the risk and expected return of portfolios of these two stocks for the following (assumed) correlation coefficients: -1.0 0.5 0.0 +0.5 +1.0 Correlation Coefficient and Portfolio Risk

17. Correlation Coefficient and Portfolio Risk Y Correlation Coefficient -1.0 -0.5 0.0 +0.5 +1.0 X

19. All Combinations of Risky Assets

21.  (risk) Efficient Frontier  (expected return) F E

23. Combinations of a Risk Free and a Risky Asset  (risk)  (expected return) F E N r f

24. Best Risky Asset  (expected return)  (risk) F E M r f

26. The Capital Market Line Sharpe Ratio

27. The Capital Market Line r f  (expected return)  (risk) F E M

30. Individual’s Choice on the CML  (risk)  (risk)

34. Graphical Representation of the SML

36. Required Return on GSS First compute the beta of GSS: Next, apply the SML:

39. Interpreting the Beta Coefficient The beta of the market portfolio is always equal to 1.0. The beta of the risk free asset is always equal to 0.0

41. Beta Coefficients for Selected Firms