1、 外文翻译 ： Stock:Expected and unexpected return To begin, for concreteness, we consider the return on the stock of a company called Flyers. What will determine this stocks return in, say, the coming year? The return on any stock traded in a financial market is composed of two parts. First, the normal,
2、or expected, return from the stock is the part of the return that shareholders in the market predict or expect. This return depends on the information shareholders have that bears on the stock, and it is based on the markets understanding today of the important factors that will influence the stock
3、in the coming year. The second part of the return on the stock is the uncertain, or risky, part. This is the portion that comes from unexpected information revealed within the year. A list of all possible sources of such information would be endless, bet here are a few examples: News about Flyers re
4、search Government figures released on gross domestic product (GDP) The results from the latest arms control talks The news that Flyerss sales figures are higher tan expected A sudden, unexpected drop in interest rates Based on this discussion, one way to express the return on Flyers stock in the com
5、ing year would be: Total return = expected return + unexpected return R = E (R) + U Where R stands for the actual total return in the year, E(R) stands for the expected part of the return, and U stands for the unexpected part of the return. What this says is that the actual return, R, differs from t
6、he expected return, E(R), because of surprises that occur during the year. In any given year, the unexpected return will be positive or negative, but, through time, the average value of U will be zero. This simply means that on average, the actual return equals the expected return. Risk: systematic
7、and unsystematic The unanticipated part of the return, that portion resulting from surprises, is the true risk of any investment. After all, if we always receive exactly what we expect, then the investment is perfectly predictable and by definition, risk-free. In other words, the risk of owning an a
8、sset comes from surprises-unanticipated events. There are important differences, though, among various sources of risk. Look back at our previous list of news stories. Some of these stories are directed specifically at Flyers, and some are more general. Which of the news items are of specific import
9、ance to Flyers? Announcements about interest rates or GDP are clearly important for nearly all companies, whereas the news about Flyerss president, its research, or its sales is of specific interest to Flyers. We will distinguish between these two types of events, because, as we shall see, they have
10、 very different implications. Systematic and unsystematic risk The first type of surprise, the one that affects a large number of assets, we will label systematic risk. A systematic risk is one that influences a large number of assets, each to a greater of lesser extent. Because systematic risks hav
11、e marketwide effects, they are sometimes called market risks. The second type of surprise we will call unsystematic risk. An unsystematic risk is one that affects a single asset or a small group of assets. Because these risks are unique to individual companies or assets, they are sometimes called un
12、ique or asset specific risks. We will use these terms interchangeably. As we have seen, uncertainties about general economic conditions, such as GDP, interest rates, or inflation, are examples of systematic risks. These conditions affect nearly all companies to some degree. An unanticipated increase
13、, or surprise, in inflation, for example, affects wages and the costs of supplies that companies buy, it affects the value of the assets that companies own, and it affects the prices at which companies sell their products. Forces such as these, to which all companies are susceptible, are the essence
14、 of systematic risk. In contrast, the announcement of an oil strike by a company will primarily affect that company and, perhaps, a few others (such as primary competitors and suppliers). It is unlikely to have much of an effect on the world oil market, however, or on the affairs of companies not in
15、 the oil business, so this is an unsystematic event. Systematic and unsystematic components of return The distinction between a systematic risk and an unsystematic risk is never really as exact as we make it out to be. Even the most narrow and peculiar bit of news about a company ripples through the
16、 economy. This is true because every enterprise, no matter how tiny, is a part of economy. Its like the tale of a kingdom that was lost because one horse lost a shoe. This is mostly hairsplitting, however. Some risks are clearly much more general than others. Well see some evidence on this point in
17、just a moment. The distinction between the types of risk allows us to break down the surprise portion, U, of the return on the Flyers stock into two parts. Earlier, we had the actual return broken down into its expected and surprise components: R = E (R) + U We now recognize that the total surprise
18、component for Flyers, U, has a systematic and an unsystematic component, so: R = E (R) + systematic portion + unsystematic portion Systematic risks are often called market risks because they affect most assets in the market to some degree. The important thing about the way we have broken down the to
19、tal surprise, U, is that the unsystematic portion is more or less unique to Flyers. For this reason, it is unrelated to the unsystematic portion of return on most other assets. To see why this is important, we need to return to the subject of portfolio risk. Diversification and portfolio risk Weve seen earlier that portfolio risks can, in principle, be quite different from the risks of the assets that make up the portfolio. We now look more closely at the riskiness of an individual asset versus the risk of a
