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1) how acquired company’s rate of return compensate acquiring company for its business risk to which it is exposed to ???
2) what is the difference between “Business risk” and “Market risk” ????
1. The risk will be measured by the beta, and this will determine the rate of return required.
2. Business risk/market risk/systematic risk are the same thing, as I explain in my lectures on CAPM. (Although be careful about the words – market risk is not the same as ‘the risk of the market’)
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