The goal of diversification is
to eliminate:
Homework Answers
Option (c) is correct
The goal of diversification is to eliminate unsystematic risk.
Unsystematic risk is the risk specific to the particular firm, company or industry.This risk can be eliminated or diversified away by investing in different securities.
Systematic risk is the market risk and is for every industry or company. It cannot be eliminated.
Add Answer to:
The goal of diversification is
to eliminate:
Question 8 5 pts The goal of diversification is...
questions 4-6 D Question 4 2.08 pts As the required rate of return of an investment...
questions 4-6
D Question 4 2.08 pts As the required rate of return of an investment decreases, the market price of the investment decreases. ○True O False D Question 5 2.08 pts Proper diversification generally results in the elimination of risk. O True ○ False 2.08 pts D Question 6 Total risk equals systematic (market) risk plus unsystematic (hirm-specific) risk. O True ○ False MacBook Air 名 F5 F7 8 9
Diversification can eliminate: a. all risk in a portfolio. b. risk only if the investor is...
Diversification can eliminate: a. all risk in a portfolio. b. risk only if the investor is risk averse. c. the systematic risk in a portfolio. d. the idiosyncratic risk in a portfolio.
Problem 2 What is diversification in the field of financial investment? Does diversification eliminate all types...
Problem 2 What is diversification in the field of financial investment? Does diversification eliminate all types of risk? Justify your answer with a graph
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...
Question 6 (1 point) Diversifying a portfolio across various sectors and industries might do more than...
Question 6 (1 point) Diversifying a portfolio across various sectors and industries might do more than one of the following. However, this diversification will do which one of the following? 1) Reduce the portfolio's unsystematic risk level. 2) Reduce the portfolio's systematic risk level. 3) Reduce the portfolio beta. 4) Increase the security's risk premium.
Diversification cannot eliminate risk entirely because stocks (assets, projects) have: (a) nonsystematic risk (b) systematic risk...
Diversification cannot eliminate risk entirely because stocks (assets, projects) have: (a) nonsystematic risk (b) systematic risk (c) unique risk (d) diversifiable risk
Question 1 3 pts Winston Corporation is evaluating a new project that will require an increase...
Question 1 3 pts Winston Corporation is evaluating a new project that will require an increase in accounts receivable of $80,000, an increase in inventory of $250,000, and an increase in accounts payable of $160,000. The change in networking capital for this project will be: $330,000 $170,000 +$170,000 -$490,000 MACRS Depreciation Allowances Property Class Year 3-Year 5-Year 7-Year 33.33% 20.00% 14.29% 44.45 32.00 24.49 14.81 19.20 17.49 11.52 12.49 11.52 8.93 5.76 8.92 7.41 8.93 4.46 Question 2 3 pts...
QUESTION 37 A well-informed institutional investor would most likely use standard deviation to measure: a. Total...
QUESTION 37 A well-informed institutional investor would most likely use standard deviation to measure: a. Total risk. b. Systematic risk. c. Unsystematic risk. d. Equity risk premium. QUESTION 38 A well-informed individual investor would most likely use beta to measure: a. Total risk. b. Systematic risk. c. Unsystematic risk. d. Equity risk premium.
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...
#5 and #8 please help de portfolio e portfolio's T useu two-fold the two-fold, then the...
#5 and #8 please help
de portfolio e portfolio's T useu two-fold the two-fold, then the required return should incre urn? Lastly, a porti Describe the ribe the difference between the correlation coefficient between asset's beta coefficient. coefficient between two random variables and an more concise va ortfolio il 63) Support or reject the following statement, "Diversification reduces the total risk & What is the difference between systematic and unsystematic risk? 7 Support or reject the following statement," It is...
questions 4-6
D Question 4 2.08 pts As the required rate of return of an investment decreases, the market price of the investment decreases. ○True O False D Question 5 2.08 pts Proper diversification generally results in the elimination of risk. O True ○ False 2.08 pts D Question 6 Total risk equals systematic (market) risk plus unsystematic (hirm-specific) risk. O True ○ False MacBook Air 名 F5 F7 8 9
Problem 2 What is diversification in the field of financial investment? Does diversification eliminate all types of risk? Justify your answer with a graph
Question 6 (1 point) Diversifying a portfolio across various sectors and industries might do more than one of the following. However, this diversification will do which one of the following? 1) Reduce the portfolio's unsystematic risk level. 2) Reduce the portfolio's systematic risk level. 3) Reduce the portfolio beta. 4) Increase the security's risk premium.
Question 1 3 pts Winston Corporation is evaluating a new project that will require an increase in accounts receivable of $80,000, an increase in inventory of $250,000, and an increase in accounts payable of $160,000. The change in networking capital for this project will be: $330,000 $170,000 +$170,000 -$490,000 MACRS Depreciation Allowances Property Class Year 3-Year 5-Year 7-Year 33.33% 20.00% 14.29% 44.45 32.00 24.49 14.81 19.20 17.49 11.52 12.49 11.52 8.93 5.76 8.92 7.41 8.93 4.46 Question 2 3 pts...
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...
#5 and #8 please help
de portfolio e portfolio's T useu two-fold the two-fold, then the required return should incre urn? Lastly, a porti Describe the ribe the difference between the correlation coefficient between asset's beta coefficient. coefficient between two random variables and an more concise va ortfolio il 63) Support or reject the following statement, "Diversification reduces the total risk & What is the difference between systematic and unsystematic risk? 7 Support or reject the following statement," It is...
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