Answer each question with 100 words
Understand how capital gains and percentage returns are calculated.
Explain the difference between average stock returns and risk-free returns.
Explain how the Sharpe Ratio is used to manage risk.
Explain how an investor chooses the best portfolio of stock to hold.
Discuss how diversification is used to mitigate risk in the portfolio.
Describe the relationship between risk and expected return (CAPM).
Describe the dividend discount model (DDM) approach and how is it different than CAPM..
Distinguish between forward contracts and future contracts.