2.1.2. Implication on Relationship Among Firm Size, Return, and β
We believe that the reason for higher return of small sized firm is that there are not enough information for the investor. For example, if the price of the stocks are the same and one company is well known, and the other is not known to the public, most of the people will prefer to buy the one that is known. To motivate people
Realized Return
We invested government bond.
- In UK
Rate of government bond UK(10.26)=3.7%
<10.26.2009> <11.27.2009>
$1000/1.6324 = £612.6 £22.6662 * 1.6511
£612.6 * 0.037=£ 22.6662 = $37.424
∴ Realized Return = $37.424
Return (Domestic Investment)
We invested government bond.
- In USA
Rate of government
In October 2009, United Kingdom inflation rate is + 1.5%. According to graph and table, now United Kingdom inflation rate is higher than September. (+ 0.4%).
- CPI inflation declined to 1.1% in October.
- RPI dropped to -1.3%
- The successive downturn
- Factors : low food and electiricity prices, decline in utility bills, reduction VAT
2. United States
In October 2009, United States
risk)
- 이자율이 경제주체의 재무상태에 불리한 방향으로 변동할 때 발생하는 손실 가능성으로 대부분의 자산․부채가 이자율에 민감한 항목으로 구성된 금융기관의 경우 가장 본질적인 리스크의 하나
- 이자율리스크도 그 원천에 따라 여러 가지 하위리스크로 구별하고 있음
1) 이자율변경리
risk and return is one of the most important factor to consider.)
What is ‘Risk’?
Danger? – 위험은 투자자본의 잠재적 손실 ( Risk is Potential of losing invested capital.)
위험과 수익률의 상충관계 (Trade Off) : Potential of losing invested capital as well