Financial Concepts: Conclusion
  1. Financial Concepts: Introduction
  2. Financial Concepts: The Risk/Return Tradeoff
  3. Financial Concepts: Diversification
  4. Financial Concepts: Dollar Cost Averaging
  5. Financial Concepts: Asset Allocation
  6. Financial Concepts: Random Walk Theory
  7. Financial Concepts: Efficient Market Hypothesis
  8. Financial Concepts: The Optimal Portfolio
  9. Financial Concepts: Capital Asset Pricing Model (CAPM)
  10. Financial Concepts: Conclusion

Financial Concepts: Conclusion


We hope that this has given you some insight into the market and your investment strategies. Let's recap what we've learned in this tutorial:

  • The risk/return tradeoff is the balance between the desire for the lowest possible risk and the highest possible return.
  • Higher risk equals greater possible return.
  • Diversification lowers the risk of your portfolio.
  • Dollar cost averaging is a technique by which, regardless of the share price, a fixed dollar amount is invested on a regular schedule.
  • Asset allocation divides assets among major categories in order to create diversification and balance the risk.
  • Random walk theory says that stocks take a random and unpredictable path.
  • Efficient Market Hypothesis (EMH) says it is impossible to beat the market because prices already incorporate and reflect all relevant information.
  • The concept of the optimal portfolio attempts to show how rational investors will maximize their returns for the level of risk that is acceptable to them.
  • Capital asset pricing model (CAPM) describes the relationship between risk and expected return and serves as a model for the pricing of risky securities.

  1. Financial Concepts: Introduction
  2. Financial Concepts: The Risk/Return Tradeoff
  3. Financial Concepts: Diversification
  4. Financial Concepts: Dollar Cost Averaging
  5. Financial Concepts: Asset Allocation
  6. Financial Concepts: Random Walk Theory
  7. Financial Concepts: Efficient Market Hypothesis
  8. Financial Concepts: The Optimal Portfolio
  9. Financial Concepts: Capital Asset Pricing Model (CAPM)
  10. Financial Concepts: Conclusion
RELATED TERMS
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  3. International Capital Asset Pricing Model (CAPM)

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  4. Random Walk Theory

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  5. Price Efficiency

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  3. What is the breakdown of subjects covered on the Series 6 exam?

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