马 致用·专业英语系列教制 财务管理 Professional 专业英语 English for 第3版 Professiondl English for Financial Financial Managemene 东北财经大学刘媛媛 Management 3/e ⊙积撼五出出御热 刘媛媛编 机械工业出版社 Topic 6:Risk Return
Professional English for Financial Management 3/e 刘媛媛 编 机械工业出版社 Topic 6: Risk & Return
Outline Learning Objectives:Topic 6 6.I Introduction to Risk and Return 6.2 Efficient Market Hypothesis(EMH) 6.3 Portfolio Theory 6.4 Beta and Capital Asset Pricing Model 6.5 Arbitrage Pricing Theory 6-2 SDUT Chen Gang Spring 2018
Outline & Learning Objectives: Topic 6 6.1 Introduction to Risk and Return 6.2 Efficient Market Hypothesis (EMH) 6.3 Portfolio Theory 6.4 Beta and Capital Asset Pricing Model 6.5 Arbitrage Pricing Theory 6-2 SDUT Chen Gang Spring 2018
Core words expressions:Topic 6 Ref.pp.102~103 Post-earnings-announcement drift In financial economics and accounting research,post- earnings-announcement drift,or PEAD (also named the standardized unexpected earnings,SUE effect)is the tendency for a stock's cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks (even several months)following an earnings announcement. If the profit results are better than expected,for instance, the stock will continue to advance over time in response. Conversely,in the event of an earnings disappointment,the stock will lose ground for the duration of the drift. 意陵萄省桶基着晝攀凳鑫金文嫠状氏受宋是过 度)，这显然有悖于EMH。 >6-3 SDUT Chen Gang Spring 2018
Core words & expressions: Topic 6 Ref. pp.102~103 Post-earnings-announcement drift In financial economics and accounting research, postearnings-announcement drift, or PEAD (also named the standardized unexpected earnings, SUE effect) is the tendency for a stock’s cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks (even several months) following an earnings announcement. If the profit results are better than expected, for instance, the stock will continue to advance over time in response. Conversely, in the event of an earnings disappointment, the stock will lose ground for the duration of the drift. 意味着价格并没有迅速对盈余公告做出反应，而是经过 一段时间调整后才将盈余信息融入股价（反应不足/过 度），这显然有悖于EMH。 6-3 SDUT Chen Gang Spring 2018
Introduction to Risk and Return (1/6) All financial assets are expected to produce cash flows,and the risk of an asset is judged by the risk of its cash flows. 2 assumptions about risk and return: The returns from investments are normally distributed. Investors are risk-averse. The risk of an asset can be considered in two ways: on a stand-alone basis The asset's cash flows are analyzed by themselves in a portfolio context The asset's cash flows are combined with those of other assets,and then the consolidated cash flows are analyzed. >6-4 SDUT Chen Gang Spring 2018
Introduction to Risk and Return (1/6) All financial assets are expected to produce cash flows, and the risk of an asset is judged by the risk of its cash flows. 2 assumptions about risk and return: The returns from investments are normally distributed. Investors are risk-averse. The risk of an asset can be considered in two ways: on a stand-alone basis The asset’s cash flows are analyzed by themselves in a portfolio context The asset’s cash flows are combined with those of other assets, and then the consolidated cash flows are analyzed. 6-4 SDUT Chen Gang Spring 2018
Introduction to Risk and Return (2/6) In a portfolio context,an asset's risk can be divided into two components: diversifiable risk can be diversified away and thus is of little concern to diversified investors market risk Reflects the risk of a general stock market decline and cannot be eliminated by diversification,and does concern investors Only market risk is relevant,diversifiable risk is irrelevant to rational investors because it can be eliminated An asset with a high_degree of relevant(market)risk must provide a relatively high expected rate of return to attract investors. Investors in general are averse to risk,so they will not buy risky assets unless those assets have high expected returns >6-5 SDUT Chen Gang Spring 2018
Introduction to Risk and Return (2/6) In a portfolio context, an asset’s risk can be divided into two components: diversifiable risk can be diversified away and thus is of little concern to diversified investors market risk Reflects the risk of a general stock market decline and cannot be eliminated by diversification, and does concern investors Only market risk is relevant, diversifiable risk is irrelevant to rational investors because it can be eliminated An asset with a high degree of relevant (market) risk must provide a relatively high expected rate of return to attract investors. Investors in general are averse to risk, so they will not buy risky assets unless those assets have high expected returns 6-5 SDUT Chen Gang Spring 2018