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Fundamentals of Corporate Finance, 4/c/e

Fundamentals of Corporate Finance, 4/e

Stephen A. Ross, Massachusetts Institute of Technology
Randolph W. Westerfield, University of Southern California
Bradford D. Jordan, University of Kentucky
Gordon S. Roberts, York University

Some Lessons from Capital Market History

Learning Objectives

After studying this chapter in the textbook, you should be able to:

Compute and explain the difference between dollar returns and percentage returns that are earned on investment in financial assets.

Explain what a risk premium is and its role as a component of expected returns.

Calculate average returns from investment in financial assets.

Calculate the two measures of risk, namely variance and standard deviation.

Be familiar with the characteristics of the normal distribution as it relates to returns earned on investment in financial assets.

Explain the efficient markets hypothesis (EMH) and distinguish between its three forms.

Define the term anomaly and explain why anomalies represent challenges to the EMH.

2002 McGraw-Hill Higher Education
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