Equity risk: Difference between revisions
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imported>Doug Williamson (Layout.) |
imported>Doug Williamson (Remove surplus word.) |
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In the Capital asset pricing model, total equity risk is driven both by: | In the Capital asset pricing model, total equity risk is driven both by: | ||
:(i) the underlying business risk and | :(i) the underlying business risk and | ||
:(ii) | :(ii) the additional financial risk resulting from the level of debt in the firm’s financial structure. | ||
Revision as of 16:32, 9 September 2017
1.
The variability of returns to equity investors, often measured by the standard deviation of equity returns.
In the Capital asset pricing model, total equity risk is driven both by:
- (i) the underlying business risk and
- (ii) the additional financial risk resulting from the level of debt in the firm’s financial structure.
2.
The risk of losses on direct equity investments (shareholdings) or on other equity-linked positions.
