Re: Cost of equity
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This is wrong. There is no way "the index" is always less risky than an individual stock.
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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.
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Okay, in general it may be true, but not often enough to make the blanket statement that indices are less risky than stocks.
The beta of a market is 1, it is not true that no stock's beta is <1.
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