Provide a brief discussion of approximately 300 words detailing the risks inherent in stock returns in...

  

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Provide a brief discussion of approximately 300 words detailing the risks inherent in stock returns in a portfolio of shares using the concepts of standard deviation and diversification as a basis for your discussion. Under what conditions can a firm's weighted average cost of capital be used for assessing new projects? In the context of the net present value (NPV) model discuss: o The conditions that must be observed such that a project that has a positive NPV should be chosen. Why, in these circumstances, would a project that has a positive NPV be chosen? o Why depreciation does not involve a flow of cash and therefore can be ignored. o Within the standard present-value model, why tax savings on interest payments are excluded from the cash-flow estimation. o The effect of sunk costs within the analysis of a project's viability. Provide a brief discussion of approximately 300 words detailing the risks inherent in stock returns in a portfolio of shares using the concepts of standard deviation and diversification as a basis for your discussion. Under what conditions can a firm's weighted average cost of capital be used for assessing new projects? In the context of the net present value (NPV) model discuss: o The conditions that must be observed such that a project that has a positive NPV should be chosen. Why, in these circumstances, would a project that has a positive NPV be chosen? o Why depreciation does not involve a flow of cash and therefore can be ignored. o Within the standard present-value model, why tax savings on interest payments are excluded from the cash-flow estimation. o The effect of sunk costs within the analysis of a project's viability.

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Risks in Stock Returns and the Importance of Diversification When investing in a portfolio of shares there are inherent risks associated with stock returns One common measure of risk is standard devia... View the full answer