INTRO TO RISK, RETURN, AND OPPORTUNITY COST OF CAPITAL

RISK RETURN LESSON PLAN

 

Teaching Materials

• Lesson - Intro to Risk, Return, and Opportunity Cost of Capital  (see below for printable lesson)

• Overhead

• Many pre-calculated examples

Lesson Activity

• Define risk and return
• Discuss the relationship between the two – high/high or low/low
• Introduce concept of investment portfolio
• Define portfolio risk
• Introduce variance
• measure of uncertainty
• present formula
• work through examples
• Introduce Standard Deviation
• present formula
• talk about using a calculator to calculate SD and variance
• Discuss the concept of diversification
• Discuss real life examples – stocks, bonds, money market vehicles, large cap, small cap, foreign markets, etc…
• Introduce covariance
• present formula
• work through examples
• Work through SD of a portfolio
• Discuss Beta
• look at calculation of portfolio beta
• work through examples
• negative versus positive beta

Assessment/Evaluation

Have students complete worksheet. A passing grade is 70% or greater. 

 

 

 

Lesson Printable Materials - Worksheets

Print out the teaching lesson pages and exercise worksheets for use with this lesson:

 

RISK AND RETURN LESSON
	Intro to Risk, Return, and Opportunity Cost of Capital Lesson and Worksheet Lesson and worksheet.
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