FIN 010 Lecture Notes - Lecture 15: Financial Statement, Uncorrelated Random Variables
Document Summary
Financial statements in light of history: the financial statements must also be viewed in the light of the overall history. As we have already noted, external factors influence an organization daily. "future-looking" about what could happen to be genuinely successful. Risk diversification: when a company has measured the potential return and risk of a given project or investment, the same strategy may be applied to another one it might consider. The diversification process helps a company understand how different projects / investments interact when combined. Risks can also increase when two or more projects / investments merge, and risks can slowly decrease as well. So assessing the relationship is critical: let"s start by noting that risks can be categorized as (idiosyncratic) or not (systematic) diversifiable. A diversifiable risk is a risk unique to a project / investment that can be changed by adding additional projects / investments.
