Week 2 - Lecture 1 Flashcards
(7 cards)
1
Q
Who are the two players in business finance?
A
Investors and companies
2
Q
What are the two types of investment in shares in a company?
A
- dividend payment
- capital gains/loss
3
Q
What is the formula for a dividend payout rate?
A
D1 / Po
D1 = this period’s dividend payment Po = share price you pay at beginning of investment
4
Q
What is the formula for a capital gain/loss?
A
P1 - Po / Po
change in price / original price
5
Q
How do you calculate the total return on investment in shares in this period?
A
(P1 - Po) + D1 / Po
6
Q
How do we find expected return?
A
Average of all possible outcomes
7
Q
What will give us the level of risk associated with the investment?
A
The variance or standard deviation of all these possible outcomes will give us the level of risk associated with the investment
