ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Factor Models
Many attributes might be related to an asset's risk, including market capitalization (size), dividend yield, growth, price-earnings ratio, etc. The use of these traditional descriptors, however, presents a few problems:
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Does the Broader Diversification Increase Expected Return?

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Diversification is investing money in a wide range of investments, not in a single investment. It is a risk management strategy as investing in different investments helps to reduce the risk associated. The risk for a person in investing in a single investment is higher than diversifying the money in different investments. Diversification reduces its exposure to risk. 

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