PPT Slide
?2 = b2 ?2 + ?e2.
?2 = stand-alone risk of stock.
b2 ?2 = market risk of stock.
?e2 = variance of stock j’s regression
error term.
Explain the relationship between stand-alone, market, and diversifiable risk.
j
j
M
j
j
j
j
M
Previous slide
Next slide
Back to first slide
View graphic version