Equity risk
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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.
