Chapter 8 Flashcards
1
Q
Stand-Alone Risk:
A
Probability of not getting an expected return for an individual company.
2
Q
Risk in a Portfolio Context:
A
How much an individual member of a portfolio contributes to the Portfolio’s Risk.
3
Q
Return:
A
The potential future cash income and change in the cash value of an investable assets (financial or business assets)
- For Common Stocks: dividends and change in the price per share.
- For a Company: Free Cash Flow (total company or individual projects) and the change in its cash value.
4
Q
Diversification:
A
Means the Standard Deviation of the Portfolio can be lower than the Standard Deviations of the Portfolio’s members.
