Homework Answers
Risk = Systematic Risk and Unsystematic Risk
Systematic Risk represented by Beta and it is market Risk and can't be eliminated through diversification.
Unsystematic Risk is Organozation specific and can be eliminated through proper diversification strategy.
Option E is correct.
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Unsystematic risk: Multiple Choice points is measured by standard deviation. eBook Print References C ) is...
Checl 9 Problem 13-26 Systematic versus Unsystematic Risk (LO3) 10 points Consider the following information about...
Checl 9 Problem 13-26 Systematic versus Unsystematic Risk (LO3) 10 points Consider the following information about Stocks I and II: Rate of Return If State Occurs References State of Economy Recession Normal Irrational exuberance Probability of State of Economy 0.15 0.70 0.15 Stock I 0.02 0.21 0.06 Stock II -0.25 0.09 0.44 The market risk premium is 7%, and the risk-free rate is 4%. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) The standard deviation...
A stock has a standard deviation of 32.00% and a correlation with the overall market of...
A stock has a standard deviation of 32.00% and a correlation with the overall market of 0.41. If the market portfolio has a standard deviation of 29.00%, what is the Beta for the stock? Submit Answer format: Number: Round to: 2 decimal places. A stock has a Beta of 1.39. The current risk free rate in the economy is 2.60%, while the market portfolio risk premium is 6.00%. What is the risk premium for holding this stock?
The scroll down options are 1. systematic/unsystematic risk 2. systematic/unsystematic risk 3. standard deviation/risk aversion 4....
The scroll down options are
1. systematic/unsystematic risk
2. systematic/unsystematic risk
3. standard deviation/risk aversion
4. correlation coefficient/diversification
Risk is the potential for an investment to generate more than one return. A security that will produce only one known return is referred to as a risk- free asset, as there is no potential for deviation from the known expected outcome. Investments that have the chance of producing more than one possible outcome are called risky assets. Risk, or potential variability...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk and Rates of Return:...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk
and Rates of Return: Risk in Portfolio Context The capital asset
pricing model (CAPM) explains how risk should be considered when
stocks and other assets are held . The CAPM states that any stock's
required rate of return is the risk-free rate of return plus a risk
premium that reflects only the risk remaining diversification. Most
individuals hold stocks in portfolios. The risk of a stock held in...
QUESTION 18 Diversification refers to the _____. A. reduction of the stand-alone risk of an individual...
QUESTION 18 Diversification refers to the _____. A. reduction of the stand-alone risk of an individual investment, measured by the standard deviation of its returns, by combining it with other investments in a portfolio B. reduction of the systematic risk of an individual investment, measured by the standard deviation of its returns, by combining it with other investments in a portfolio C. reduction of the systematic risk of an individual investment, measured by its beta coefficient, by combining it with...
Term Description Risk A. The term applied to the risk of an asset that is measured...
Term Description Risk A. The term applied to the risk of an asset that is measured by the standard deviation of the asset's expected returns. That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Expected rate of return B. Beta coefficient L C . This model determines the appropriate required return on a security as the sum of the market's risk-free rate and a risk premium based on the market's risk...
Diversification and risk The graph shows the relationship between risk, measured as the standard deviation of a stock po...
Diversification and risk The graph shows the relationship between risk, measured as the standard deviation of a stock portfolio's return, and the number of different stocks in the portfolio for a hypothetical stock market. 014102030406040200RISK (Standard deviation of portfolio return)NUMBER OF STOCKS IN PORTFOLIO True or False: Increasing the number of stocks in a portfolio reduces market risk. True False Consider two stock portfolios. Portfolio A consists of 20 different stocks from firms in different industries. Portfolio B consists of...
Chapter 06 Practice Test Question 07 19 Calculating A Two Security Portfolio Standard Deviation An investor...
Chapter 06 Practice Test Question 07 19 Calculating A Two Security Portfolio Standard Deviation An investor puts 60% of their money in Stock 1 and the rest in Stock 2. Stock 1 has a standard deviation of 45% and Stock 2 has a standard deviation of 35%. The covariance between the two stocks is 0.091344. What is the portfolio's standard deviation? points Skipped Multiple Choice eBook 41.49% Print References 36.29% 34.96% 36.92%
The use of leverage: Multiple Choice points C) decreases the equity beta but does not affect...
The use of leverage: Multiple Choice points C) decreases the equity beta but does not affect the asset beta eBook References increases the equity beta but does not affect the asset beta. decreases the equity beta and increases the asset beta. increases both the asset and the equity betas. decreases both the asset and the equity betas.
** need help only with standard deviation for b. i got 19.94% but that is wrong....
** need help only with
standard deviation for b.
i got 19.94% but that is wrong.
Thanks in advance!
Rate of Return if State Occurs Probability of State of Economy .22 State of Economy Recession Normal Irrational exuberance .62 .16 Stock .045 .355 .215 Stock II -.37 .29 .47 The market risk premium is 11.7 percent, and the risk-free rate is 4.7 percent. a. Calculate the beta and standard deviation of Stock I. (Do not round intermediate calculations. Enter the...
Checl 9 Problem 13-26 Systematic versus Unsystematic Risk (LO3) 10 points Consider the following information about Stocks I and II: Rate of Return If State Occurs References State of Economy Recession Normal Irrational exuberance Probability of State of Economy 0.15 0.70 0.15 Stock I 0.02 0.21 0.06 Stock II -0.25 0.09 0.44 The market risk premium is 7%, and the risk-free rate is 4%. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) The standard deviation...
The scroll down options are
1. systematic/unsystematic risk
2. systematic/unsystematic risk
3. standard deviation/risk aversion
4. correlation coefficient/diversification
Risk is the potential for an investment to generate more than one return. A security that will produce only one known return is referred to as a risk- free asset, as there is no potential for deviation from the known expected outcome. Investments that have the chance of producing more than one possible outcome are called risky assets. Risk, or potential variability...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk
and Rates of Return: Risk in Portfolio Context The capital asset
pricing model (CAPM) explains how risk should be considered when
stocks and other assets are held . The CAPM states that any stock's
required rate of return is the risk-free rate of return plus a risk
premium that reflects only the risk remaining diversification. Most
individuals hold stocks in portfolios. The risk of a stock held in...
Term Description Risk A. The term applied to the risk of an asset that is measured by the standard deviation of the asset's expected returns. That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Expected rate of return B. Beta coefficient L C . This model determines the appropriate required return on a security as the sum of the market's risk-free rate and a risk premium based on the market's risk...
Chapter 06 Practice Test Question 07 19 Calculating A Two Security Portfolio Standard Deviation An investor puts 60% of their money in Stock 1 and the rest in Stock 2. Stock 1 has a standard deviation of 45% and Stock 2 has a standard deviation of 35%. The covariance between the two stocks is 0.091344. What is the portfolio's standard deviation? points Skipped Multiple Choice eBook 41.49% Print References 36.29% 34.96% 36.92%
The use of leverage: Multiple Choice points C) decreases the equity beta but does not affect the asset beta eBook References increases the equity beta but does not affect the asset beta. decreases the equity beta and increases the asset beta. increases both the asset and the equity betas. decreases both the asset and the equity betas.
** need help only with
standard deviation for b.
i got 19.94% but that is wrong.
Thanks in advance!
Rate of Return if State Occurs Probability of State of Economy .22 State of Economy Recession Normal Irrational exuberance .62 .16 Stock .045 .355 .215 Stock II -.37 .29 .47 The market risk premium is 11.7 percent, and the risk-free rate is 4.7 percent. a. Calculate the beta and standard deviation of Stock I. (Do not round intermediate calculations. Enter the...
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