finance exam 2

Beta?

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Terms in this set (7)

Measures a stock's market risk, and shows a stock's volatility relative to the market.
Indicates how risky a stock is if the stock is held in a well-diversified portfolio.

Discount rates?

Is the opportunity cost of capital, and is the rate that could be earned on alternative investments of equal risk

Default risk premium?

added fee that a lender receives for the perceived chance that the borrower will not pay back the loan

Term structure?

Relationship between interest rates (or yields) and maturities

Percentage of amount borrowed to be added to the amount loaned and paid back

Stand alone risk?

The risk an asset would have if it were a firm's only asset and if investors owned only one stock

A long term debt instrument in which a borrower agrees to make payments of principals and interest, on specific dates, to the holders of the bond