Table of Contents
Analysis of Risk
Risk
Different Views of Risk
What is Risk & Uncertainty?
General Risk Categories
More Risk Categories
Credit Risk
Foreign Investment Risks
Cultural Risk
More Foreign Investment Risks
Risk Aversion
Risk Preferers
How Do We Measure Risk?
Is this a fund for widows & orphans?
Review: Variance
Standard Deviation (?)
Normal Curve
Another Measure of Risk
An Example Using V
B is much riskier
Beta Also Measures Risk
How can we use probabilities with standard deviation?
Expected Value (EV)
Calculate EV
Calculate Standard Deviation (?)
Standard Deviation Measures Risk
B is much riskier!
The Valuation Model
How can we adjust for risk?
Choices
Certainty Equivalent Adjustment Factor (?)
Valuation Model Adjusted for Risk
Risk-Adjusted Discount Rate
Summary of Risk
Summary of Risk
Summary of Risk
Summary of Risk
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Author: Frederica Shockley
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