- Explain the difference between average stock returns and risk-free returns.
- Explain how the Sharpe Ratio is used to manage risk.
- Describe the significance of US equity risk premiums as a method of comparison with other countries.
- Explain how an investor chooses the best portfolio of stock to hold.
- Discuss how diversification is used to mitigate risk in the portfolio.
- Describe the relationship between risk and expected return (CAPM).
- Explain how cyclicality of revenues and operating leverage help determine beta.
- Describe the dividend discount model (DDM) approach and how is it different than CAPM.
