http://knol.google.com/k/narayana-rao-kvss/copy-of-template-investment-banking/2utb2lsm2k7a/885
Concept Definition and Explanation
Variability in earnings of the firm is the risk to investors. Hence risk analysis is the analysis of variability of earnings of a firm. More volatile income flows mean greater risk.
The total risk of the firm or earngins variability has two components: business risk (operating earnings variability), and financial risk (net earnings variability).
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