Foundations of Finance: Uncertainty, Characterizing Prof. Alex Shapiro the Return Distribution, and Investor Preferences 1 Lecture Notes 5 Uncertainty, Characterizing the Return Distribution, and Investor Preferences I. Readings and Suggested Practice Problems II. Dealing with Uncertainty and Risk III. How to calculate Expected Return IV. How to calculate the Variance and Standard Deviation of Return V. How to calculate the Covariance and Correlation between Two Returns VI. The Normal Distribution VII. Investor Preferences under Uncertainty VIII. Appendix A: Some Useful Probability Rules IX. Additional Readings Buzz Words: Probability Model, Value-at-Risk (VaR), Utility TheoryFoundations of Finance: Uncertainty, Characterizing the Return Distribution, and Investor Preferences 2 I. Readings and Suggested Practice Problems BKM pp. 940-945, 948-969. BKM Chapter 5: Section 5.2. BKM Chapter 6. Suggested Problems, Chapter 5: 4, 12-15, Chapter 6: 1, 6,
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