| A | B |
|---|
| the greater the potential reward the _____ the risk | greater |
| First key lesson from capital market history | there is reward for bearing risk |
| 2nd key lesson from capital market history | the greater the potential reward, the greater the risk |
| one part of total dollar return | capital gains |
| 2nd part of total dollar return | dividends |
| capital gains = price received - | price paid |
| % return = $ returned - | money invested |
| total dollar return | return on investment measured in dollars |
| total percent return | return on investment measure as percentage of original investment |
| return on investment definition | the gain (or loss) from an investment |
| risk free rate | rate of return on a riskless investment |
| example of rick free investment | Treatsury bills |
| risk premium | excess return on a risky asset over the risk-free rate |
