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What derivatives are and how are they used to manage risk

Assignment Help Financial Management
Reference no: EM132067076

Assignment Steps

· Show research on the matter that is properly cited and referenced according to APA with references

· Create a substantive message would include a personal or professional experience as it relates to the theory, please provide examples.

· Word count of each substantive participation 100-150 words of each one of the following subjects:

Describe how variance and standard deviation are used to measure the variability of individual stocks.

Explain how an investor chooses the best portfolio of stock to hold.

Discuss how diversification is used to mitigate risk in the portfolio.

Describe the relationship between risk and expected return (CAPM).

Explain how the risk-free rate, market risk premium and stock beta are used to calculate expected returns using the capital asset pricing model (CAPM).

Explain how cyclicality of revenues and operating leverage help determine beta.

Describe the dividend discount model (DDM) approach and how is it different than CAPM.

Understand how to calculate the weighted average cost of capital to determine the optimum level of debt and equity to finance an investment.

What derivatives are and how are they used to manage risk.

Reference no: EM132067076

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