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What is diversification

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1..The two major sources of long-term capital for a corporate organization are Debt and Equity. Bonds are the major instruments of debt for companies. How are bond prices determined in the market and what is the relationship between interest rates and bond prices?

2.What is diversification? How does diversification reduce risk?

3.Long run returns in the USA stock market have been quite strong averaging 12% return per year. However, these returns are far from certain and vary from year to year. Considering what you have learnt about intrinsic value and what you have seen of the markets, do you think that average stock on the stock market are fairly priced? Give reasons for your answers.

Reference no: EM133123102

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