Investment appraisal Flashcards
(5 cards)
1
Q
What is the NPV proforma ?
A
2
Q
What is Systematic risk ?
A
Market risk
Cannot be diversified away.
Affects ALL markets within economy.
3
Q
What is are some examples of Systematic risk ?
A
Changes in macroeconomics:
interest rates, inflation rates, capital allowances (tax rates).
4
Q
What is Non-systematic risk?
A
Unique / specific risk.
Can be diversified away.
Relates to factors that affect the return on individual investments.
5
Q
What are some examples of Non-systematic risk ?
A
Decreased in demand below envisaged.
Unexpected actions of competitors.
Increased costs.
