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    diversification

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    Explain the finance concepts found in the readings and how it relates to the scenario.

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    https://brainmass.com/business/accounting/diversification-245544

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    Explain the finance concepts found in the readings and how it relates to the scenario.

    One of the finance concepts is the risk/return tradeoff. The concept means that low levels of risk are associated with low potential returns, whereas high levels of risk are associated with high potential returns. In this case if Guillermo selected the high tech approach his potential returns would be high, however, because of his investment, his risk would also be high.

    The next finance concept is that of diversification. If Guillermo cannot tolerate even the short term fluctuations in demand for furniture then he should diversify. In the scenario Guillermo has a patented process for creating a coating for his furniture, he can create flame retardant furniture and can ...

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