Re: Cost of equity
[ QUOTE ]
This is wrong. There is no way "the index" is always less risky than an individual stock.
[/ QUOTE ]
In general, the risk in owning an index is less than the risk of holding a single stock, due to diversification reducing the overall risk!
That said, some indexes are overdiversified, and you can achieve similar diversification risk reduction by holding a few select stocks.
|