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Unformatted text preview: Financial market history Two types of risk: 1) general economic risk 2) industry and firm specific risk Risk measurement: standard deviation, variance Calculate expected return, variance, and standard deviation from probability distribution and historical data Risk and return for portfolios Diversification Portfolio expected return, variance and standard deviation Chapter 7 The CAPM RWJ Chapter 13.69 Economywide risk vs. firm specific risk Risk for a welldiversified portfolio Beta of a stock (zero beta, negative beta) CAPM – SML Chapter 9 Cost of Capital RWJ Chapter 15.115.5 Cost of equity, debt, preferred stocks WACC Project beta Project beta vs. overall firm beta Divisional beta...
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 Winter '11
 Zheng
 Economics, Corporate Finance, Probability theory, Generally Accepted Accounting Principles

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