Would yes yes would you have eliminated all of would

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Unformatted text preview: ios still NO! have risk. Some risk can be diversified away and some can not. away Market risk (systematic risk) is nondiversifiable. This type of risk can not be diversified away. can Company-unique risk (unsystematic risk) is diversifiable. This type of risk risk) diversifiable This can be reduced through diversification. diversification. Market Risk Market Unexpected changes in interest rates. Unexpected interest Unexpected changes in cash flows Unexpected cash due to tax rate changes, foreign competition, and the overall business cycle. cycle. Company-unique Risk Company-unique A company’s labor force goes on company’s strike. strike. A company’s top management company’s dies in a plane crash. dies A huge oil tank bursts and floods huge a company’s production area. company’s As you add stocks to your portfolio, company-unique risk is reduced. company-unique As you add stocks to your portfolio, company-unique risk is reduced. company-unique portfolio risk number of stocks As you add stocks to your portfolio, company-unique risk is reduced. company-unique portfolio risk Market risk number of stocks As you add stocks to your portfolio, company-unique risk is reduced. company-unique portfolio risk companyunique risk Market risk number of stocks Do some firms have...
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This note was uploaded on 01/17/2014 for the course GEB 3375 taught by Professor Sweo during the Winter '08 term at University of Central Florida.

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