Engaging into several activities allow the risk to reduce markedly.
• To have the same risk and return of the market, we can buy all the market, but when we buy from 20 to 30 stocks, the diversiable risk disappears and only remains the unique/systematic/market risk. We bear only the non-diversifiable risk, that is to say the market risk.
• To reduce the risk of our market, we can also diversify, investing in different markets. But diversification doesn't work well in these days: all markets evolve in the same directions
• Diversification is a good thing for the investor, but not inevitable for companies. There’s no premium for firms that diversify, because each investor can diversify itself.
Betas and value additivity >>
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Corporate finance
PART ONE: CAPITAL EXPENDITURE
The present value
Investment
decisions
Practical
problems in capital budgeting
Firms evaluation
PART TWO. BASICS OF FINANCE
The financial
markets
Options
The market
efficiency
Risk
Mergers,
Acquisitions, and Corporate Control
International
Financial Management
PART THREE FINANCING DECISIONS
Corporate
financing
Dividend policy
and capital structure
PART FOUR FINANCIAL MANAGEMENT
Financial
planning
Short-term
financial management
Course created and updated by Dr David Chelly, PhD in Management sciences from the University of Tours.
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