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QUESTION 8 If an Fls trading portfolio of stock is not well-diversified, the additional risk that...
Question 19 1 pts A well-diversified portfolio is most likely to have: Only systematic risk Both, systematic and unsystematic risk Only unsystematic risk
Question 19 1 pts A well-diversified portfolio is most likely to have: Both, systematic and unsystematic risk Only systematic risk Only unsystematic risk
What type of risk can be eliminated in a well diversified portfolio? unsystematic market undiversifiable systematic
In well diversified portfolio, which part of the risk of individual assets is likely to be diversified away? The unique risk The systematic risk The market-related risk The Markowitz risk All of the above will be diversified away.
Please answer
The benchmark for a well-diversified stock portfolio is the market portfolio, which is a portfolio containing all stocks. The relevant risk of an individual stock is measured by its beta coefficient, which is defined under the Capital Asset Pricing Model (CAPM) as the amount of risk that the stock contributes to the well-diversified portfolio. Based on your understanding of the CAPM and beta, answer the following question: Which of the following statements about stock's correlation with the market...
Suppose that a well-diversified portfolio has an expected return of 11% and that the following two factors have an impact changes to GDP (Fi), and changes to unexpected inflation (F2), The risk free rate is 8%. The APT equation is: on this portfolio's returns: -0.05 + β| (0.035) + β2 (0.0825) (i) Suppose that the sensitivity of the well-diversified portfolio to GDP is (-1.25). What is its sensitivity to unexpected inflation? 5 Marks) (ii If one rebalances this well-diversified portfolio,...
To solve this problem, note that a well-diversified portfolio should lie on the Capital Market Line. The market portfolio has an expected return of 11.5 percent and a standard deviation of 19 percent. The risk-free rate is 4.1 percent. a. What is the expected return on a well-diversified portfolio with a standard deviation of 9 percent? b. What is the standard deviation of a well-diversified portfolio with an expected return of 20 percent?
A stock's contribution to the market risk of a well-diversified portfolo is called risk. According to the Capital Asset Pricing Model (CAPM), this risk can be measured by a metric called the beta coefficient, whih degree to which a stock moves with the movements in systematic the market. unsystematic Based on your understand ing of the beta coefficient, indicate whether each stakememewrevdlowing table is true or false: Statement True False A stock that is more volatile than the market will...
questions 37-40 please
risk is negligible. 37. In a well-diversified portfolio, A. No diversifiable B. Market C. Systematic D. Idiosyncratic E. None of the above 38. The possibility of arbitrage arises when A. There is no consensus among investors regarding the future direction of the market, and thus trades are made arbitrarily B. Mispricing among securities creates opportunities for riskless profits C. Two identically risky securities carry the same expected returns D. Investors do not diversify E. All of the...
An investor holds two well-diversified portfolios on US securities. The expected return on portfolio A is 13% and the expected return on portfolio B is 8%, and βA = 1 and βB = 0.7. What should be the risk-free rate according to the CAPM?