Risk and Return Theory (Annotated Bibliography Sample)

Annotated Bibliography – Risk and Return Theory
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Executive Summary
In this summary, the discussion seeks to identify various aspects and approaches to risk and return trade-off theory. The theory of risk and return trade-off states an existing correlation between risk and expected return. This means an investor must accept higher risks in order to receive higher returns. The risk and return trade-off are at the heart of modern portfolio theory as a fundamental concept for investors in the current age and era. This paper is a thorough analysis and summary of various articles relating to subjects and topics around risk and return theory. The annotated bibliographies applied in this paper highlight and provide a comprehensive overview of the development of this theory, its underlying principles, and applications.
Moreover, other articles highlight the various criticisms and limitations of trade-off theory in relation to risk and return. For instance, Mazur (2021) explains the concept of the theory and a comprehensive analysis of its application in non-fungible tokens. Other authors like Bitsch et al., (2010) provide an overview of the theory's characteristics in a comprehensive study. The discussed articles comprise research papers and journals with complete study methods and literature reviews. Therefore, the knowledge of this paper is vast and a thorough analysis of 15 articles on the topic of risk-return trade-off theory.
Annotated Bibliography
Mazur, Mieszko. "Non-Fungible Tokens (NFTs): The Analysis of Risk and Return." SSRN, 31 Oct 2021:pp. (3-34) https://ssrn.com/abstract=3953535
Non-Fungible Tokens (NFTs) and their market impact are thoroughly analyzed in the article "Non-Fungible Tokens (NFTs): The Analysis of Risk and Return" by Mieszko Mazur. The article gives a thorough review of the idea behind NFTs and their applications, as well as the benefits and drawbacks of the technology. The author defines NFTs, which are special digital assets that signify ownership of a certain thing, such as a piece of art or a collectible. According to Mazur (2021, p. 6-7), NFTs are distinct from conventional cryptocurrencies like Bitcoin since they are not interchangeable and each token has a unique value.
The article goes on to describe the different uses for NFTs, including their use in gaming and virtual reality as well as art and collector markets. Mazur (2021, p. 8) continues by outlining the dangers of NFTs, including the security of digital assets, the possibility of fraud, and market volatility. The paper points out that the NFT market is still rather young, which heightens the uncertainty around the technology. However, there are possible benefits to investing in NFTs, such as long-term value growth and the chance of earning money from selling NFTs.
The article's conclusion summarizes the main findings and offers suggestions for investors thinking about investing in NFTs. Before making an investment, investors should carefully examine the technology and the market, according to Mazur (2021, p. 14). They should also be aware of any potential hazards. As the NFT market is still in its early stages of development, the report advises investors to be prepared for the long term (Mazur, 2021. p. 13) Overall, this essay offers a thorough analysis of Non-Fungible Tokens (NFTs) and their market implications. The author offers suggestions for potential investors and provides a thorough examination of the risks and rewards related to the technology. If you're interested in learning more about NFTs and their potential impact on the market, this article is a great starting point.
Bitsch, F., Buchner, A., & Kaserer, C. (2010). Risk, return, and cash flow characteristics of infrastructure fund investments. EIB papers, 15(1), 106-136.
The paper "Risk, Return and Cash Flow Characteristics of Infrastructure Fund Investments" by Florian Bitsch, Axel Buchner, and Christoph Kaserer offers a thorough analysis of the investment characteristics of infrastructure funds. The study is based on a sample of 120 public and private infrastructure funds that are participating in a variety of worldwide infrastructure projects (Bitsch et al., 2010, p. 133). The article provides analytical details on the risk-return trade-off of infrastructure funds as well as the fundamental cash flow characteristics of these assets. The writers begin by providing an overview of the prior history of infrastructure funds and the background of infrastructure investment.
The method for data analysis is then outlined, including cash flow modeling and regression analysis (Bitsch et al., 2010, p. 123). The study's findings demonstrate that infrastructure funds have no association with conventional financial markets, making them an excellent instrument for investor diversification. The outcomes show that infrastructure funds offer a steady and predictable stream of cash flows, which attracts long-term investors as an investment. This article's assessment of the risk-return characteristics of infrastructure funds is one of its major contributions. The authors discover that while typical financial investments have a lower risk than infrastructure funds, the risk premium is higher (Bitsch et al., 2010, p. 111). This is a result of the consistent and predictable revenue flows produced by infrastructure projects, which is crucial in unpredictable economic times. The return on infrastructure funds is also found to be positively connected with fund size, suggesting that larger funds are more profitable than smaller funds, according to the authors.
Overall, this article is a useful resource for investors, decision-makers, and practitioners in the subject of infrastructure financing since it offers insightful information about the investment characteristics of infrastructure funds (Bitsch et al., 2010, p. 107-112). The well-researched analysis offers a thorough assessment of the risk, return, and cash flow characteristics of investments made with infrastructure funds.
Falkenstein, Eric G. "Risk and Return in General: Theory and Evidence." June 15, 2009: 16-150). Available at SSRN: https://ssrn.com/abstract=1420356 or http://dx.doi.org/10.2139/ssrn.1420356
Falkenstein (2009) examines the connection between risk and return in the world of finance in this essay. He starts by defining risk and returns and going over the common models that are used to describe how they relate to one another, such as the Capital Asset Pricing Model (CAPM). The validity of the CAPM and other mainstream models is then questioned by empirical data presented by Falkenstein (2009, p. 25), who contends that these models may not adequately reflect the link between risk and return in actual financial markets. The relationship between risk and return is further discussed by Falkenstein using other theories such as behavioral finance and the existence of market frictions.
The article also considers how his findings may affect portfolio management and asset price (Falkenstein, 2009, p. 25). A thorough review of the state of research on the connection between risk and return provides both practitioners and scholars in the field of finance with insightful information. The author provides a nuanced understanding of the intricate link between risk and returns through his critical analysis of conventional models and study of alternate hypotheses. This essay is excellently written and well-researched, making it a useful tool for finance students, professionals, and researchers (Falkenstein, 2009, p. 123-140). The principles are understandable to a broad audience thanks to the author's utilization of scientific evidence and examples from the real world. Overall, the paper offers important insights into the world of money and a fresh perspective on the relationship between risk and return.
Senthilnathan, Samithamby. (2015). "Risk, Return and Portfolio Theory – A Contextual Note." SSRN: https://ssrn.com/abstract=2627423 or http://dx.doi.org/10.2139/ssrn.2627423
The article's main points are portfolio theory, risk, and return. The author makes the case that the idea of risk and return is crucial to portfolio management and is at the heart of investing decision-making (Senthilnathan, 2015, p.1). The Capital Asset Pricing Model (CAPM), Modern Portfolio Theory (MPT), and Arbitrage Pricing Theory are just a few of the theories of risk and return that are covered in detail throughout the article (APT). The author talks about the presumptions and constraints of these theories, as well as how these presumptions affect how applicable they are to actual investment scenarios. After providing some background information on risk and return, the paper makes the case that, while these theories are helpful in understanding the link between risk and return, they do not provide a comprehensive explanation of a complete picture of the investment landscape (Senthilnathan, 2015, p.1). The author points out that a more thorough knowledge of risk and return is required since real-world investing circumstances are sometimes more complicated than the assumptions underlying these theories.
The article's thorough examination of the various risk-return theories is one of its main advantages. Each theory is briefly described by Senthilnathan (2015, p. 1), who also examines its assumptions and constraints. This makes the paper a fantastic resource for investors, portfolio managers, and students who want to grasp the connection between risk and return in greater depth. The article's emphasis on the applications of these theories in the real world is another quality (Senthilnathan, 2015, p.1). Although th...