Risk And Return On At and t Common Stock Introduction - Financial Management

We provided a brief introduction to risk and the relationship between risk and return. Recall that the required rate of return on an investment—financial asset (security) or physical asset—was represented as an increasing function of that investment’s perceived risk; that is, the greater the risk, the greater the required rate of return.1 This chapter develops the relationship between risk and return in more detail and presents methods for measuring risk. Later sections of the chapter focus on investment diversification and portfolio risk analysis.

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Financial Management Topics