投资学全英文ppt4.ppt

4-4
Why Return is Important
• The rate of return indicates how rapidly an investor can build wealth.
• Allows us to “keep score” on how our investments are doing compared to our expectations
4-7
The Time Value of Money and Returns
• The sooner you receive a return on a given investment, the better
• A dollar received today is worth more than a dollar received in the future
4-5
Key Factors in Return
• Internal Characteristics
– Type or risk of investment – Issuer’s management – Issuer’s financing
• External Forces
– Political environment – Business environment – Economic environment – Inflation – Deflation
• Historical Performance
– Provides a basis for future expectations – Does not guarantee future performance
• Expected Return
– Return an investor thinks an investment will earn in the future
– Determines what an investor is willing to pay for an investment or if they are willing to make an investment
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2. Discuss the role of time value of money in measuring return and defining a satisfactory investment.
3. Describe real, risk-free, and required returns and the calculation and application of holding period return.
• Components of Return
– Income: cash or near-cash that is received as a result of owning an investment
– Capital gains (or losses): the difference between the proceeds from the sale of an investment and its original purchase price
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4-6
Table 4.4 Historical Returns for Select Asset Classes (1900-2011)
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• The sooner your money can begin earning interest, the faster it will grow
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4-2
Return and Risks
Learning Goals (cont’d) 4. Explain the concept and calculation of yield and how to find growth rates. 5. Discuss the key sources of risk that might affect potential investments. 6. Understand the risk of a single asset, risk assessment, and the steps that combine return and risk.
Chapter 4
Return and Risk
Return and Risks
Learning Goals
1. Review the concept of return, its components, the forces that affect the investor’s level of return, and historical returns.
• Total Return: the sum of the income and the capital gain (or loss) earned on an investment over a specified period of time
Copyright ©2014 Pearson Education, Inc. All rights reserved.
Copyright ©2014 Pearson Education, Inc. All rights reserved.
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The Concept of Return
• Return
– The level of profit from an investment, or – The reward for investing