Capital Market History

• When starting a new business, the owner's equity is most at risk
• Risk-Return Trade-Off
• Greater the risk = Greater the reward!
• Total Dollar Return
• Income from investment + Capital Gain Loss due to change in price
• Percentage Returns
• Dividend Yield = Income/Purchase Price
• Capital Gain Yield = (Ending price - Purchase price)/(Purchase price)
• Total Percent Return = Dividend Yield + Capital Gains Yield
• Holding Period Return (R)
• R = (P1 - P0 + D1)/(P0)
• Where P0 is current price
• Where P1 is future price givin most recent dividend
• D1 = Most recent Dividend