Lecture 1 - fundamentals of risk

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Last updated 7:52 PM on 4/17/26
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12 Terms

1
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risk of liquidity

the time taken to convert assets into cash

2
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risk of currency

acquiring assets denominated in another currency

3
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risk of politics

risk caused by political or economic changes

4
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risk of business

risk caused by the nature of a business

5
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financial risk

risk caused by how a firm is financed

6
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holding period return

ending value of investment/beginning value of investment

7
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holding period yield

HPR - 1

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annual HPR

HPR1/n

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annual HPY

annual HPR - 1

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arithmetic mean return

[sum of] HPY/n

11
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geometric mean return

(all HPR multiplied)1/n - 1

12
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expected return

(sum of) ri x p(ri)