FIN 3104 Lecture Notes - Lecture 6: Preferred Stock, Systematic Risk, Common Stock
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Class business: heard on the street readings begin today, march 3 through thursday, march 5. Fear & greed: as the market increases in value, it continues to steadily increase slowly. Total risk (standard deviation: unsystematic risk risk is diversi ed away (shareholders perspective) as a stock is combined with other stocks in a portfolio, systematic risk. Risk a relative measure of the degree of variability of possible outcomes over time. 1. 2 utility theory & risk aversion: risk seekers. Don"t put all your eggs in one basket: example: suppose we toss a fair coin one time. Suppose you are willing to win if you win, but if you lose, you pay . Now suppose you are get if you win but pay if you lose. Keep going and if you win, you get ,000 but if you lose you have to pay ,000. This is one coin toss you either get it or you don"t.