Question

1. Define realized return
2. What is risk?
3. Define the holding period return
4. Distinguish between the variance and standard deviation
5. What is the normal distribution?

Answer 1

Realized return is the return on investment per year which involves dividend inflow, cash inflow and cash outflow over the period.
Risk is the variability of the cash flows or variability in returns of stock. Risk in stock market can be both systematic and unsystematic risk.
Holding period is the return over the entire period of investment involving dividend inflow, cash inflow and cash outflow over the period.
Variance is the sum of square of deviation from mean whereas standard deviation is the square root of sum of square of deviation from mean
Normal Distribution is also called the bell curve which represents the values which are distributed about the mean.

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