Risk of Individual and Stocks, Stock Valuation, and Stock Market Equilibrium

Business & Finance
Tutor: None Selected Time limit: 1 Day

Should portfolio effects impact the way investors think about the risk of individual stocks?

Oct 3rd, 2015

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Investors think about risk of individual stocks differently. Thus, portfolio diversification always affect an investors view of the risk on individual stocks. Usually, stock stand alone may be always important to an un-diversified investor but it's irrelevant to a diversified investor. Also, a rational risk-averse investor is more concerned with the impact that the stock has on his/her portfolio than on the stock stand-alone risk since stand alone risks can be eliminated by holding the stock in a well diversified portfolio. The resultant is a market risk since its present when the entire market portfolio is held.

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Sep 18th, 2015

Hi. For any clarification, you are free to do so. Thank you for your question.

Sep 18th, 2015

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