Session 5: Marginal Investors, Risk Measures and Models

You may be regretting the shift from the soft stuff (objectives, social welfare etc.) to the hard stuff, but trust me that it is still fun.. If it is not, keep telling yourself that it will become fun. Anyway, here are a few thoughts about today's class.
1. The Essence of Risk: There has been risk in investments as long as there have been investments. If you have the time, pick up a copy of Against the Gods by Peter Bernstein, John Wiley and Sons. It is a great book and an easy read. If you want more, you should also pick up a copy of Capital Ideas by Peter as well... That traces out the development of the CAPM....
2. More on Models: If you want to read more about the CAPM, you can read chapter 3 in my book. It provides an extended discussion of what we talked about in class today.... If you don't have the book, no big deal.
3. Diversifiable versus non-diversifiable risk: The best way to understand diversifiable and non-diversifiable risk is to take your company and consider all of the risks that it is exposed to and then categorize these risks into whether they are likely to affect just your company, your company and a few competitors, the entire sector or the overall market.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr20/session5slides.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session5atest.pdf
Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session5asoln.pdf
Moody’s ratings (Jan 2020): http://www.stern.nyu.edu/~adamodar/pc/datasets/sovrrating2020.xlsx
Sovereign CDS spreads (Jan 2020): http://www.stern.nyu.edu/~adamodar/pc/datasets/sovrCDS2020.xlsx

Видео Session 5: Marginal Investors, Risk Measures and Models канала Aswath Damodaran