1) Single Security and Diversified Portfolio Vies are illustrative examples only and do not represent any investment. Diversification does not eliminate the risk of market loss.

2) Dimensions of returns. Diversification does not eliminate the risk of market loss. 1. Relative price as measured by the price-to-book ratio; value stocks are those with lower price-to-book ratios. 2.Profitability is a measure of current profitability, based on information from individual companies’ income statements.

3) Structure determines performance.1. Beta: A quantitative measure of the co-movement of a given stock, mutual fund, or portfolio with the overall market.2. Price-to-Book Ratio: A company's capitalization divided by its book value. It compares the market's valuation of a company to the value of that company as indicated on its financial statements.3.Profitability: A measure of a company’s current profits. We define this as operating income before depreciation and amortization minus interest expense, scaled by book equity.