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Financial Markets
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Equity premium Puzzle
Equity premium = the % stocks outperform risk-free rates (eg. government treasury bonds)
Why return stocks > bonds ? -> RISK
Markowitz , Journal of Finance 1952 : What's the "best investment" given historical data (avg return, variance, standard dev) will continue in the future?
example:
Rf (risk free interest rate) = 5%
VOC avg return (dutch east-india compagnie) : 20% (Mean)
sigma(standard dev) = 40%
Standard Deviation
Variance
Covariance
Correlation
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- https://www.coursera.org/learn/financial-markets/lecture/bY2L3/portfolio-diversification-and-supporting-financial-institutions-i
- Created by
- Nico Vergauwen · Nov 2016
- Updated
- Nov 21, 2016
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