Terminology (Risk)
This term represents the uncertainty of future returns.
Risk
This measure quantifies the dispersion of returns.
Standard Deviation
This is a graphical representation of the probability distribution of a dataset.
A Bell Curve
This type of option gives the holder the right, but not the obligation, to purchase a specific stock at a specific price for a certain time period.
Call Option
This term describes annual dividends paid by a company divided by its share price.
Dividend Yield
This term measures the spread of a set of numbers.
Variance
This relationship indicates that higher risk typically leads to a higher return.
The relationship between risk and return
This is the specific price at which an option holder can purchase the underlying stock.
Strike or Exercise Price
These are short-term government bonds with the lowest risk and return.
T-Bills
This term measures the sensitivity of a stock's returns to the overall market returns.
Beta (B)
Reducing risk by investing in a variety of assets is called this.
Diversification
This is the cost of acquiring an option.
Premium