30. Which of following statement is correct? A. Market risk refers to the tendency of a...
30. Which of following statement is correct?
A. Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock, and its beta will be greater than 1.0.
B. Managers should under no conditions take actions that increase their firm's risk relative to the market, regardless of how much those actions would increase the firm's expected rate of return.
C. Coefficient correlation is the co-movement between stocks which can take the value between -1 to +1
D. A and C
E. B and C
Homework Answers
The correct answer is option A i.e. Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock, and its beta will be greater than 1.0. is a correct statement
Feel free to ask in case of any query relating to this question
Add Answer to:
30. Which of following statement is correct?
A. Market risk refers to the tendency of a...
One key result of applying the Capital Asset Pricing Model is that the risk and return...
One key result of applying the Capital Asset Pricing Model is that the risk and return of an individual security should be analyzed by how that security affects the risk and return of the portfolio in which it is held. True False Portfolio diversification reduces the impact of market risk on the portfolio. True False Market risk refers to the tendency of a stock to move with the general economy. A stock with aboveaverage market risk will tend to be...
- The tendency for tow variables to move together refers to their correlation (TRUE/FALSE)? - Diversifiable...
- The tendency for tow variables to move together refers to their correlation (TRUE/FALSE)? - Diversifiable risk is the part of a security’s risk that can be eliminated by proper diversification while market risk remains after no company specific risk has been diversified (TRUE/FALSE)? - Floating-rate bonds are bonds that pay a fixed interest over their lifetime whereas fixed-rate bonds pay variable interest rates, which reflect the general level of interest rates (TRUE/FALSE)? - A market portfolio is a portfolio...
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...
T 2s In pontfolio analysis, we often use ex post (historical) returns and standard deviations, Je...
T 2s In pontfolio analysis, we often use ex post (historical) returns and standard deviations, Jes pile the taet that are really interested in ex ante (future) data. 29 Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock, and its than 1.0. beta will be greater r corporations earn returns for their stockholders by acquiring and operating...
1. According to the basic stock valuation model, the value an investor assigns to a share of stock is dependent upo...
1. According to the basic stock valuation model, the value an investor assigns to a share of stock is dependent upon the length of time the investor plans to hold the stock. 2. True b. False Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock, and its beta will be greater than 1.0. a. True b. False...
A stock's contribution to the market risk of a well-diversified portfolo is called risk. According to...
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...
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...
13. Beta is a measure of a stock's: Systematic Risk Risk relative to the market Both...
13. Beta is a measure of a stock's: Systematic Risk Risk relative to the market Both A and B None of the above The most volatile stock would have Beta. Higher than 1.0. Lower than 1.0. Very close to 0.0. Beta is not related to volatility. Discounted cash flow techniques used in valuing common stock are based on: future value analysis. present value analysis. The CAPM. the APT. c.
The term Beta refers to a measure of a stock’s price volatility relative to the stock...
The term Beta refers to a measure of a stock’s price volatility relative to the stock market as a whole. A beta of 1 means the stock’s price moves exactly with the market. A beta of 1.6 means the stock’s price would increase by 1.6% for an increase of 1% in the stock market. A larger beta means the stock price is more volatile. The betas for the stocks of the companies that make up the Dow Jones Industrial Average...
A stock's contribution to the market risk of a well-diversified portfolio is called the Capital Asset...
A stock's contribution to the market risk of a well-diversified portfolio is called the Capital Asset Pricing Model (CAPM), this risk can be measured by a metric called the beta coefficient, which calculates the degree to which a stock moves with the movements in the market. risk. According to Based on your understanding of the beta coefficient, indicate whether each statement in the following table is true or false: Statement True False Beta measures the volatility in stock movements relative...
T 2s In pontfolio analysis, we often use ex post (historical) returns and standard deviations, Jes pile the taet that are really interested in ex ante (future) data. 29 Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock, and its than 1.0. beta will be greater r corporations earn returns for their stockholders by acquiring and operating...
1. According to the basic stock valuation model, the value an investor assigns to a share of stock is dependent upon the length of time the investor plans to hold the stock. 2. True b. False Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock, and its beta will be greater than 1.0. a. True b. False...
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...
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...
13. Beta is a measure of a stock's: Systematic Risk Risk relative to the market Both A and B None of the above The most volatile stock would have Beta. Higher than 1.0. Lower than 1.0. Very close to 0.0. Beta is not related to volatility. Discounted cash flow techniques used in valuing common stock are based on: future value analysis. present value analysis. The CAPM. the APT. c.
A stock's contribution to the market risk of a well-diversified portfolio is called the Capital Asset Pricing Model (CAPM), this risk can be measured by a metric called the beta coefficient, which calculates the degree to which a stock moves with the movements in the market. risk. According to Based on your understanding of the beta coefficient, indicate whether each statement in the following table is true or false: Statement True False Beta measures the volatility in stock movements relative...
Most questions answered within 3 hours.
-
A training program has been developed to train Managers on how
to keep control over their...
asked 10 minutes ago -
On
Jan 2, 2019 a firm purchased equipment for $10,000. Depreciation
expensefor the year ending December31,...
asked 14 minutes ago -
in Malaysia:
(a) Select THREE (3) items that are not included in the
calculation of GDP...
asked 13 minutes ago -
You own an oil pipeline that will generate a $2 million cash
return over the coming...
asked 12 minutes ago -
According to a study by Kanishka Misra of the University of
Michigan and Paolo Surico of...
asked 16 minutes ago -
You are camping at the top of a mountain (altitude=700 m).
Returning from the lake (altitude=500...
asked 16 minutes ago -
1) The demand for the Tesla electric automobile is P = 200,000 –
2.1 Q, where...
asked 20 minutes ago -
The pH of a 50.0 mL sample of a buffer changed by one unit when
6.12...
asked 45 minutes ago -
Determine the amount of sales (units) that would be necessary
under
Break-Even Sales Under Present and...
asked 30 minutes ago -
1. Why do you think that the first thing you learn about in a
Biology course...
asked 29 minutes ago -
A pendulum has a length of 64.5m. How many times does it move
back and forth...
asked 42 minutes ago -
A constant electric field accelerates a proton from rest through
a distance of 1.65 m to...
asked 46 minutes ago