Term
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Definition
| return on a risky asset expected in the future |
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Term
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Definition
| group of assets such as stocks and bonds held by an investor |
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Term
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Definition
| percentage of a portfolio's total value in a particular asset |
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Term
| principle of diversification |
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Definition
| spreading an investment across a number of assets will eliminate some, but not all, of the risk |
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Term
| Systematic risk principle |
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Definition
| the expected return on a risky asset depends only on that asset's systematic risk |
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Term
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Definition
| amount of systematic risk present in a particular risky asset relative to that in an average risky asset |
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Term
Security market line
(SML) |
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Definition
| Positively sloped straight line displaying the relationship between expected return and beta |
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Term
Capital Asset Pricing Model
(CAPM) |
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Definition
| Equation of the security market line showing the relationship between expected return and beta |
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Term
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Definition
| the min required return on a new investment |
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