Risk and Return
Define and discuss the concepts of risk and return. Also discuss the importance of portfolio diversification and the relationship to risk and return.
Discuss beta and its importance. What type of investors would invest in a high beta stock and a low beta stock? Also, in your textbook, review the Real World case, focusing on “Beta, Beta, Who’s Got the Beta?,” on page 343. Is beta a useful tool? Why were the beta estimates discussed in the reading different?