The document discusses risk and rates of return. It states that the risk-free rate of return is used as the required rate of return for Treasury securities. For corporate stocks and bonds, the required rate of return is the risk-free rate plus a risk premium. It also defines expected return as the return an investor expects based on factors like price and growth, while required return is based on the risk of the asset. It shows how to calculate expected returns using state probabilities and returns, and how standard deviation can be used to measure risk with a greater standard deviation indicating greater risk.