Capital asset pricing model (part a) - ACCA Financial Management (FM)

[@warmongerfenrir8524]

You're the best teacher in the world as of 2024.

[@UFOpricey]

you absolute legend! wish I could buy you a pint

[@questionmarks5267]

Example of airline very relevant these days. Thanks for the lecture

[@opentuition]

Thank you for your comment :-)

[@blackm9063]

Thank you Sir, we can find that the Ukrainian Russian War Now is affecting the level of the Systematic Risk over some of the commodities.

[@muhammadnasser355]

Lol 😆

[@blackm9063]

@@muhammadnasser355 What

[@hetanshthakore5886]

can systematic risk be reduced by diversification among various sectors? eg Like you said that in order to remove unsystematic risk you have to invest in various companies so even if 1 airline fails others will stay afloat Can we use the same logic and diversify among various sectors like Accounting firms, and oil firms in order to reduce systematic risks? And even cant we reduce systematic risks by doing fundamental risk mgmt analysis of various companies to see that which company is more exposed to forex changes in the same sector as compared to others eg We can say that although almost all accountants face low forex risk if the accountancy firm is just a small local mom and pop firm it will face even lower risk as compared to multinationals like PWC? and so we can remove such forex risk by investing only in small firms

[@opentuition]

I do actually explain this in the lectures - this is only the first of the lectures on CAPM. Investing in a different sector or mix of sectors will change the level of systematic risk and an investor can therefore choose the level of systematic risk that they want. However lower systematic risk will mean they will be getting a lower return, higher systematic risk will get them a higher return. This is unlike diversification to reduce the unsystematic risk - the unsystematic risk can be reduced by diversifying without a reduction in the return.