Discussion Assignment 4.1

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Risk and Return

Activity Context

This discussion helps you develop the skills to master the following course competencies:

o Integrate financial analyses into general business management planning and decision making.

Activity Instruction

Compare and contrast the concepts of risk and return. Also discuss the importance of portfolio diversification and its relationship to risk and return.

Support your post as appropriate with the theories presented in this week's required reading.

Readings (see attached)

Use your Corporate Finance: Core Principles and Applications textbook to read the following:

o Chapter 10, "Risk and Return: Lessons From Market History." o Chapter 11, "Return and Risk: The Capital Asset Pricing Model

(CAPM)." Pay particular attention to page 343, "Beta, Beta, Who's Got the Beta?" This information will be used Unit 4 Discussion 2.

o Chapter 12, "Risk, Cost of Capital, and Capital Valuation."

Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2018). Corporate finance: Core principles and applications (5th ed.). New York, NY: McGraw- Hill.

Resources

o Discussion Participation Scoring Guide.