公司理财精要考试答案-词语解析.docxVIP

公司理财精要考试答案-词语解析 1. Diversifiable risk: is the part of risk that can be eliminated by diversification. It is one that is particular to a single asset or, at most, a small group. It is also called unsystematic risk. 2. Preferred stock: is a form of equity that has preference over common stock in the payment of dividends and in the distribution of corporation assets in the event of liquidation. It is an important example of perpetuity, too. 3. Risk premium: is the minimum amount of money by which the?expected return?on a risky asset must exceed the known return on a?risk-free asset, or the expected return on a less risky asset. It is difference between the expected return and the risk-free rate. 4. Principle of diversification: The principle of diversification tells us that spreading an investment across many assets will eliminate some of the risk. 5. Systematic risk: is the one type of surprise (unanticipated events) that affects a large number of assets. It is also called no non-diversifiable risk or market risk. 6. Unsystematic risk: is the one type of surprise (unanticipated events) that affects a single asset or a small group of assets. It is also called diversifiable risk, unique risk, or asset-specific risk. 7. Portfolio theory: is a theory of?finance?that attempts to maximize portfolio expected?return?for a given amount of portfolio risk, or equivalently minimize?risk?for a given level of expected return, by carefully choosing the proportions of various?assets. 8. Internal rate of return (IRR): is the rate that only depends on the cash flows of a particular investment, not on rates offered elsewhere. It is closely related to NPV. Based on the IRR rule, an investment is acceptable if the IRR exceeds the required return. It should be rejected otherwise. The IRR on an investment is the required return that results in a zero NPV when it is used as the discount rate. 9. the term structure of interest rates: The relationship between short- and long-t