Emerging Markets Show Positive Relationship Between Risk and Returns
The study looked at how the level of risk in emerging markets affects the expected returns on stocks. They used different methods to measure this risk and found that in emerging markets, higher downside risk is linked to higher expected returns. This relationship was still true even after considering other factors like dividend yield and price ratios. However, in developed markets, this link between risk and returns was not as strong and disappeared when other factors were taken into account.