Financial Management: Principles and Applications, 13/e

7.2 A Brief History of Financial Market Returns

Now that we have learned how to measure the risk and return of an investment, we can use these measurement tools to analyze how various U.S. and international investments have performed in the past. As we review these returns, keep in mind Principle 2: There Is a Risk-Return Tradeoff, which suggests that we should focus on the standard deviations as well as the expected rates of return.

U.S. Financial Markets: Domestic Investment Returns

In the introduction to this chapter, we talked about a $100 investment made by a benevolent great-grandfather that grew over a period of 84 years. In this example, ...