Tuesday, April 12, 2011

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

1 comment:

  1. THnks but can you go deeper into dem definitions?

    ReplyDelete