Assessment 4: Risk and Return

Focus on risk and reward valuations.

In this assessment, you will explore different measures and sources of risk and how to manage it, portfolio theories, the capital asset pricing model (CAPM), and the efficient market hypothesis (EMH). Other areas of consideration include stand-alone risk versus portfolio risk, risk sources and their measure, as well as portfolio efficiencies.

Introduction

This assessment focuses on risk and reward valuations.

Instructions

Complete and submit the Assessment 4 Template [XLSX].

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:

• Competency 1: Analyze financial environments and concepts.
  • Describe why expected return is considered forward-looking.
• Competency 2: Apply financial computations and processes.
  • Perform five risk and reward calculations correctly.
• Competency 3: Communicate effectively and professionally.
  • Convey clear meaning through appropriate word choice and usage.

RESOURCES:

Risk and Return

Understanding what constitutes risk and how to measure it is an essential component of much of financial management. Balancing risk against possible rewards is an explicit component of making sound financial decisions. The following resources discuss risk and returns.

• Cornett, M., Adair, T., & Nofsinger, J. (2019). M: Finance (4th ed.). McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
• https://courses.vitalsource.com/
• https://capella.vitalsource.com/#/books/9781260139815/cfi/6/2!/4/2/2/2@0:0
  • Chapter 9, “Characterizing Risk and Return.”
  • Chapter 10, “Estimating Risk and Return.”
• Portfolio Management.
  • Discusses portfolio management as the key to protecting your assets as an investor.