Respond to the following comments: a. Risk is not variability. If I know a stock is going
Question:
Respond to the following comments:
a. “Risk is not variability. If I know a stock is going to fluctuate between $10 and $20, I can make myself a bundle.”
b. “There are all sorts of risk in addition to beta risk. There’s the risk that we’ll have a downturn in demand, there’s the risk that my best plant manager will drop dead, there’s the risk of a hike in steel prices. You’ve got to take all these things into consideration.”
c. “Risk to me is the probability of loss.”
d. “Those guys who suggest beta is a measure of risk make the big assumption that betas don’t change.”
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Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
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