Risk & Return Table of Contents 

What is Risk? 
1 
What is Risk Tolerance? 
2 
Investment risk 
4 
Inflation Risk 
4 
Protection Against Inflation 
5 
Diversification 
6 
Risk reduction 
6 
Measuring Risks 
7 
Alpha & Beta 
7 
Lifecycle Beta 
8 
Loss Frequency 
8 
Severity 
8 
Variation 
8 
Measuring Risk Further 
9 
Probability distribution 
9 
Expected Rate of Return 
9 
Standard deviation 
9 
Maximum Possible & Probable Loss 
10 
Living with Risk & Return 
10 
Interest Rate Risk 
11 
Value risk 
11 
Call risk 
11 
Business Risk 
12 
Diversifiable risk 
12 
Credit Risk 
12 
Market Risk 
13 
What is Total Risk? 
13 
Liquidity Risk 
14 
Portfolio Risk 
14 
Covariance & Correlation Coefficient 
15 
Efficient Portfolios 
15 
Asset Allocation 
16 
Guidelines for Asset Allocation 
16 
Expected Return 
17 
How Much Return is Required? 
17 
CAPM 
17 
Treating Risk 
17 
Two Basic Methods 
18 
Risk Control 
18 
Risk Financing 
18 
Risk Control Alternatives 
19 
Risk Avoidance 
19 
Combination, Segregation 
19 
Loss Prevention & Reduction 
20 
Noninsurance Transfers 
20 
Risk Financing Alternatives 
21 
Risk Retention 
21 
Risk Transfer 
22 
hedging contract, neutralization 
23 
holdharmless agreement 
23 
Law of Large Numbers 
24 
law of averages 
24 
A Large Group of Homogeneous 
25 
The Loss Produced by Peril Must 
26 
The Occurrence of the Loss Must 
26 
The Loss Must be Large Enough 
26 
Affordable Premium Costs 
26 
The Chance of loss must be 
26 
The Peril Must be Unlikely to 
26 
United Insurance Educators, Inc.
PO Box 1030
Eatonville, WA 98328
(253) 8461155
Email: mail@uiece.com
Website: www.uiece.com