A Rational Approach to Unsystematic Risk: Re-Thinking Modern Finance
Benjamin Thomas SolomonISBN: 0972011617;
The market fall during the week of April 10th to 14th, 2000, is a timely reminder that modern finance is unable to monitor the "health" of a market. "A Rational Approach to Unsystematic Risk, Re-Thinking Modern Finance" enables market managers to determine the health of their markets. Unsystematic risk is composed of financial, operational, economic and strategic risks. Systematic risk on the other hand, is the day-to-day share price risk exhibited by a market. New financial models, based on heterogeneous investors? expectations, derived from John Burr Williams's Dividend Discount Model demonstrate that portfolios consist of 80% unsystematic risk and 20% systematic risk. In essence, unsystematic risk is vital to managing markets, portfolios and companies. A wide range of financial issues from corporate risks, portfolio management, stock exchange management, market players and market manipulation are discussed. These topics inform us on how unsystematic risk can be used to...
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