Unformatted text preview: • standard deviation- square rot of the variance • value at risk III. Risk aversion, the risk premium, and the risk-return trade-off a. Risk premium- the riskier and investment the higher the risk premium b. Trade-off between risk and expected return IV.Sources of risk: idiosyncratic and systematic risk a. Idiosyncratic risk affects specific firms, not everyone b. Systematic risk affects everyone V. Reducing Risk through Diversification a. Hedging risk b. Spreading risk...
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This note was uploaded on 05/10/2010 for the course ECO 3223 taught by Professor Staff during the Spring '08 term at University of Central Florida.
- Spring '08