Which of the following statements is true? A. total risk = nondiversifiable risk + diversi fiable...
Which of the following statements is true?
A. total risk = nondiversifiable risk + diversi fiable risk.
B. An efficient market does not have systematic risk.
C. An efficient market does not have non-diversifiable risk.
D. none of the above is true.
Homework Answers
Total risk can be defined as the summation of two risk, that is, diversifiable risk and non-diversifiable risk.
Diversifiable risk can be defined as the risk related to a specific project or investment. An investor can reduce this risk with the help of diversification. However, the investor will still have to bear the non-diversifiable risk.
Non-diversifiable risk can be defined as the risk which is implicit to the whole market. These types of risk is very difficult to predict and cannot be reduced. However, an investor can use hedging to mitigate such type of risks.
Answer: The correct statement is A.
Add Answer to:
Which of the following statements is true?
A. total risk = nondiversifiable risk + diversi fiable...
Which of the following statements concerning risk are correct? I. Non diversifiable risk is measured by...
Which of the following statements concerning risk are correct? I. Non diversifiable risk is measured by beta. II. The risk premium increases as diversifiable risk increases. III. Systematic risk is another name for non diversifiable risk. IV.Diversifiable risks are market risks you cannot avoid. O I and III only. O II and IV only. O land Il only. O III and IV only. O I, II, and III only.
Which of the following statements is true? A. A stock with a beta less than 1.0...
Which of the following statements is true? A. A stock with a beta less than 1.0 has lower nondiversifiable risk than a stock with a beta of 1.0. B. A stock with a beta greater than 1.0 has lower nondiversifiable risk than a stock with a beta of 1.0. C. A stock with a beta less than zero has no exposure to systematic risk. D. A stock with a beta less than 1.0 has higher nondiversifiable risk than a stock...
what is the correct option? Which of the following does NOT describe the risk that exists...
what is the correct option?
Which of the following does NOT describe the risk that exists in a well- diversified portfolio? Non-diversifiable risk. Systematic risk. Market risk. Mitigating risk. Asset-specific risk.
Marker risk is also called: a. Systematic risk and diversifiable risk b. Systematic risk and unique...
Marker risk is also called: a. Systematic risk and diversifiable risk b. Systematic risk and unique risk c. Non-diversifiable risk and systematic risk d. Unique risk and non-diversifiable risk
Fill Blanks 8 pts We learn three types of risk in the class: total risk, non-diversifiable...
Fill Blanks 8 pts We learn three types of risk in the class: total risk, non-diversifiable risk, and diversifiable risk. Which type of risk is related to each of the situations below? What type of risk does standard deviation measure? What type of risk does beta measure? Firm specific risk is also called? Required return is because of bearing which type of risk? -- True or False 12 pts Payback period ignores time values of cash flows. Always accept the...
loe. More information is needed to answer this question. Beta is a measure of which type...
loe. More information is needed to answer this question. Beta is a measure of which type of risk? Select one: a. Diversifiable Risk b. Systematic Risk O c. Total Risk O d. Nondiversifiable Risk o e. Band D Using the CAPM, what is the risk-free rate where the firm's required (expected) return is 8%, its Beta is 0.8, and the market's return is 9.2%? Select one: O a. 1.20% O b.2.20% O C.3.20% d. 4. 20% O e. None of...
Which of the following is statements is TRUE? Beta is a measure of unsystematic risk )...
Which of the following is statements is TRUE? Beta is a measure of unsystematic risk ) A beta of 1 implies the asset has the same unsystematic risk as the overall market. A beta > 1 implies the asset has more systematic risk than the overall market. A beta < 1 implies the asset has more systematic risk than the overall market.
10.Which one of the following statements is NOT true? Select one: A. The risk that the...
10.Which one of the following statements is NOT true? Select one: A. The risk that the lender may not receive payments as promised is called default risk. B. Investors must pay a premium (a higher price) to purchase a security that exposes them to default risk. C. Australian government securities are assumed not have any default risk and are adopted as the best proxy measure for the risk-free rate. D. The greater the risk of an investment, the greater the...
15. Which one of the following statements best defines the efficient market hypothesis? A. Efficient markets...
15. Which one of the following statements best defines the efficient market hypothesis? A. Efficient markets limit competition. B. Security prices in efficient markets remain steady as new information becomes available. C. Mispriced securities are common in efficient markets. D. All securities in an efficient market are zero net present value investments. E. Profits are removed as a market incentive when markets become efficient. 16.A news flash just appeared that caused about a dozen stocks to suddenly drop in value...
wers you may need to round your final answer I. Multiple choice questions (2 points each):...
wers you may need to round your final answer I. Multiple choice questions (2 points each): Please circle the correct answer. 1. "Trying to maintain an orderly market is not part of a market maker's job in the equity t part of a market maker's job in the equity market The statement above is a) True b) False 2. Inflation risk is an example of which of the following risks? a) non-systematic risk b) firm-specific risk c) non-diversifiable d) none...
Which of the following statements concerning risk are correct? I. Non diversifiable risk is measured by beta. II. The risk premium increases as diversifiable risk increases. III. Systematic risk is another name for non diversifiable risk. IV.Diversifiable risks are market risks you cannot avoid. O I and III only. O II and IV only. O land Il only. O III and IV only. O I, II, and III only.
what is the correct option?
Which of the following does NOT describe the risk that exists in a well- diversified portfolio? Non-diversifiable risk. Systematic risk. Market risk. Mitigating risk. Asset-specific risk.
Fill Blanks 8 pts We learn three types of risk in the class: total risk, non-diversifiable risk, and diversifiable risk. Which type of risk is related to each of the situations below? What type of risk does standard deviation measure? What type of risk does beta measure? Firm specific risk is also called? Required return is because of bearing which type of risk? -- True or False 12 pts Payback period ignores time values of cash flows. Always accept the...
loe. More information is needed to answer this question. Beta is a measure of which type of risk? Select one: a. Diversifiable Risk b. Systematic Risk O c. Total Risk O d. Nondiversifiable Risk o e. Band D Using the CAPM, what is the risk-free rate where the firm's required (expected) return is 8%, its Beta is 0.8, and the market's return is 9.2%? Select one: O a. 1.20% O b.2.20% O C.3.20% d. 4. 20% O e. None of...
Which of the following is statements is TRUE? Beta is a measure of unsystematic risk ) A beta of 1 implies the asset has the same unsystematic risk as the overall market. A beta > 1 implies the asset has more systematic risk than the overall market. A beta < 1 implies the asset has more systematic risk than the overall market.
15. Which one of the following statements best defines the efficient market hypothesis? A. Efficient markets limit competition. B. Security prices in efficient markets remain steady as new information becomes available. C. Mispriced securities are common in efficient markets. D. All securities in an efficient market are zero net present value investments. E. Profits are removed as a market incentive when markets become efficient. 16.A news flash just appeared that caused about a dozen stocks to suddenly drop in value...
wers you may need to round your final answer I. Multiple choice questions (2 points each): Please circle the correct answer. 1. "Trying to maintain an orderly market is not part of a market maker's job in the equity t part of a market maker's job in the equity market The statement above is a) True b) False 2. Inflation risk is an example of which of the following risks? a) non-systematic risk b) firm-specific risk c) non-diversifiable d) none...
Most questions answered within 3 hours.
-
3) What are the typical social structures in a global city?
asked 2 hours ago -
Luther Corporation
Consolidated Balance Sheet
December 31, 2019 and 2018 (in $ millions)
Assets
2019
2018...
asked 2 hours ago -
(Expected rate of return and risk) Carter Inc. is evaluating a
security. Calculate the investment’s expected...
asked 5 hours ago -
What specific indicators can point to lack of progress for
African Americans in American society?
asked 6 hours ago -
1-The Electrons in a beam are moving at 2.7×108 m/s in an
electric field of 15000...
asked 6 hours ago -
A gas tank is a vertical cylinder. It has a radius of 1m, a
height of...
asked 7 hours ago -
Accent Software faces the following conditions. All of these
support Accent’s use of a market-penetration pricing...
asked 8 hours ago -
A mathematically inclined friend emails you the following
instructions: "Meet me in the cafeteria the first...
asked 8 hours ago -
A monopoly sells in two countries . The demand curves in the two
countries are p1...
asked 9 hours ago -
A .15kg rubber ball is bounced off a wall. Before hitting the
wall, the ball moves...
asked 9 hours ago -
A manufacturing company preparing to build a new plant is
considering three potential locations for it....
asked 9 hours ago -
B. If compound Y has approximately the same values of solubility
in toluene as compound X,...
asked 10 hours ago