PDF-Efficient Tests of Stock Return PredictabilityJohn Y Campbell and Moto

1IntroductionNumerousstudiesinthelasttwodecadeshaveaskedwhetherstockreturnscanbepredictedbynancialvariablessuchasthedividendpriceratiotheearningspriceratioandvariousmeasuresoftheinterestrateTheecono. Bodie, Kane and Marcus. Essentials of Investments . 9. th. Global Edition. . 6. 6.1 Diversification and Portfolio Risk. Market/Systematic/Non diversifiable Risk. Risk factors common to whole economy. Dr. M. . Kashif. Lecture Preview. Expectations are very important in our financial system.. Expectations of returns, risk, and liquidity impact asset demand. Inflationary expectations impact bond prices. 6. Bodie, Kane, and Marcus. Essentials of Investments, . 9. th. Edition. 6.1 Diversification and Portfolio Risk. Market/Systematic/Nondiversifiable Risk. Risk factors common to whole economy. Unique/Firm-Specific/Nonsystematic/ Diversifiable Risk. 1:00 Lecture, Version A. Note for multiple-choice questions: Choose the closest answer. PV of Perpetuity. If Alexia receives $1,000 per year, forever, starting nine months from now, what is the total PV of all payments? Assume a stated annual interest rate of 16%, compounded every three months.. Agenda. How to add value in financing. Intro to the EMH. Types of Efficiency. Misconceptions. Valuation. Financing Opportunities. While many companies find that there are a lot of NPV-positive (profitable) projects out there, there are very few financing opportunities that are NPV -positive.. P.V. . Viswanath. A different perspective on the CAPM. We saw earlier why, intuitively, the CAPM should describe required returns.. We will see, in this chapter, the connection between the CAPM and individual investors’ construction of optimal portfolios.. ch14. Company Analysis vs. Stock Valuation. Good companies are not necessarily good . investments. Why?. Compare the intrinsic value of a stock to its market . value. Stock of a great company may be . 11:00 Lecture, Version A. Note for multiple-choice questions: Choose the closest answer. Geometric Average. On Nov. 1, 2013, . Slacky. Green Slacks was worth $100 per share. On Nov. 1, 2001, it was worth $50 per share. What is the geometric average rate of return over this 12-year period?. I. . Efficient Market. Theory (EMT). Efficient Market Theory. Where did EMT come from?. What is the Efficient Market Theory?. What does it Imply?. How can it be tested?. What conclusions can we draw about market efficiency?. Chapter Outline. 11.1 . The Expected Return of a Portfolio. 11.2 . The Volatility of a Two-Stock Portfolio. 11.3 . The Volatility of a Large Portfolio. 11.4 . Risk Versus Return: Choosing an . Efficient Portfolio. Bodie, Kane and Marcus. Essentials of Investments . 9. th. Global Edition. . 8. 8.1 Random Walks and Efficient Market Hypothesis. Random Walk. Notion that stock price changes are random. Efficient Market Hypothesis (EMH). 1.IntroductionNumerousstudiesinthelasttwodecadeshaveaskedwhetherstockreturnscanbepredictedby Page 1 of 3BInstall Instructions for CF Moto SeatsPage 2 of 31 Remove the stock seats from the vehicle using the release latch behind the seat3 Turn the PRP seat upside down on its head and place the Ch. 13. we have concentrated mainly on the return behavior of a few large portfolios. We need to expand our consideration to include individual assets. .. Specifically. , we have two tasks to accomplish. .