Which of the following is not correct? a. A risk averse person might be willing to...
Which of the following is not correct?
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Homework Answers
"C"
There is no guarantee that a large portion of savings invested in stocks, the greater his expected return. it can lead to fall in the market sentiments and decline in the value of all the stocks.
Add Answer to:
Which of the following is not correct?
a.
A risk averse person might be willing to...
Question 8 1 pts Risk-averse individuals are willing to pay a premium that is their expected...
Question 8 1 pts Risk-averse individuals are willing to pay a premium that is their expected claims. less than greater than or equal to equal to dependent on something other than
QUESTION 18 Which of the following statements is CORRECT? 1. An investor can eliminate virtually all...
QUESTION 18
Which of the following statements is CORRECT?
1.
An investor can eliminate virtually all diversifiable risk if
he or she holds a very large, well-diversified portfolio of
stocks.
2.
Once a portfolio has about 40 stocks, adding additional stocks
will not reduce its risk by even a small amount.
3.
It is impossible to have a situation where the market risk of
a single stock is less than that of a portfolio that includes the
stock.
4.
An...
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...
Which of the following is (are) most correct concerning investment risk? Market risk systematically affects most...
Which of the following is (are) most correct concerning investment risk? Market risk systematically affects most stocks in the market so it is impossible to diversify away through adding more stock in the portfolio. Random events as lawsuits, strikes, successful and unsuccessful marketing programs that affect individual firm / industry is example of market risk. It is possible to form a completely riskless portfolio by adding a very large number of security to the portfolio Risk reduction effects increase as...
od The capital asset pricing model (CAPM) explains how risk should be considered when stocks and...
od The capital asset pricing model (CAPM) explains how risk should be considered when stocks and other assets are held -Select- The CAPM states that any stock's required rate of return is -Select the risk-free rate of return plus a risk premium that reflects only the risk remaining -Select- diversification. Most individuals hold stocks in portfolios. The risk of a stock held in a portfolio is typically -Select the stock's risk when it is held alone. Therefore, the risk and...
Which of the following statements is CORRECT? a. A stock with a beta of -1.0 has...
Which of the following statements is CORRECT? a. A stock with a beta of -1.0 has no risk if it is in a 1-stock portfolio. b. By definition, all stocks in the market have the same level of market risk. c. Portfolio diversification reduces the variability of returns on an individual stock. d. If you diversify completely and hold all the stocks in the market, your portfolio will have a standard deviation equal to zero. e. The SML relates a...
Question 13 1 pts Which of the following statements is CORRECT? Once a portfolio contains about...
Question 13 1 pts Which of the following statements is CORRECT? Once a portfolio contains about 4 or 5 stocks, adding additional stocks will do little to reduce risk. An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks. The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio An investor can eliminate virtually all portfolio risk if he or...
5. Which of the following statements is CORRECT? a. The CAPM has been thoroughly tested, and...
5. Which of the following statements is CORRECT? a. The CAPM has been thoroughly tested, and the theory has been confirmed beyond any reasonable doubt. b. A graph of the SML as applied to individual stocks would show on beta the vertical axis and required rates of return on the horizontal axis. c. If two "normal" or "typical" stocks were combined to form a 2-stock portfolio, the portfolio's expected return would be a weighted average of...
Which of the following statements is/are INCORRECT? I. Beta measures a security's market risk, also known...
Which of the following statements is/are INCORRECT? I. Beta measures a security's market risk, also known as systematic risk. II. SML is a graphical depiction of WACC model. III. If investors become more risk averse, the slope of SML will increase accordingly. IV. Other things being equal, a security's required rate of return doubles when its beta value doubles. V. Diversification will normally reduce the riskiness of a portfolio of securities. VI. Federal Reserve cuts an interest rate is considered...
Which of the following statements is CORRECT? Group of answer choices -The CAPM has been thoroughly...
Which of the following statements is CORRECT? Group of answer choices -The CAPM has been thoroughly tested, and the theory has been confirmed beyond any reasonable doubt. -A graph of the SML as applied to individual stocks would show required rates of return on the vertical axis and standard deviations of returns on the horizontal axis. -If investors become more risk averse, then (1) the slope of the SML would increase and (2) the required rate of return on low-beta...
Question 8 1 pts Risk-averse individuals are willing to pay a premium that is their expected claims. less than greater than or equal to equal to dependent on something other than
QUESTION 18
Which of the following statements is CORRECT?
1.
An investor can eliminate virtually all diversifiable risk if
he or she holds a very large, well-diversified portfolio of
stocks.
2.
Once a portfolio has about 40 stocks, adding additional stocks
will not reduce its risk by even a small amount.
3.
It is impossible to have a situation where the market risk of
a single stock is less than that of a portfolio that includes the
stock.
4.
An...
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...
od The capital asset pricing model (CAPM) explains how risk should be considered when stocks and other assets are held -Select- The CAPM states that any stock's required rate of return is -Select the risk-free rate of return plus a risk premium that reflects only the risk remaining -Select- diversification. Most individuals hold stocks in portfolios. The risk of a stock held in a portfolio is typically -Select the stock's risk when it is held alone. Therefore, the risk and...
Question 13 1 pts Which of the following statements is CORRECT? Once a portfolio contains about 4 or 5 stocks, adding additional stocks will do little to reduce risk. An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks. The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio An investor can eliminate virtually all portfolio risk if he or...
Which of the following statements is/are INCORRECT? I. Beta measures a security's market risk, also known as systematic risk. II. SML is a graphical depiction of WACC model. III. If investors become more risk averse, the slope of SML will increase accordingly. IV. Other things being equal, a security's required rate of return doubles when its beta value doubles. V. Diversification will normally reduce the riskiness of a portfolio of securities. VI. Federal Reserve cuts an interest rate is considered...
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