Match the risk profile with the company that embodies it best!
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Beta =3 Jewelry retail chain that does best during
economic expansion This is because they are highly correlated with
performance of the market.
Beta =0.3 Manufacturer of everyday dairy products.Dairy
Products are sold even during recession and hence are less
correlated to market returns.
High idiosyncratic risk with high or low beta . Biotech
company awaiting FDA approval for their first drug. This is because
they have high firm specific risk.
Negative Beta Bankruptcy advisory services. This is because during
recession their requirement is more.
Match the risk profile with the company that embodies it best! - ...
Match the risk profile with the company that embodies it best! - A. B. C. D. Beta=3 - A. B. C. D. Beta=0.3 - A. B. C. D. High idiosyncratic risk with high or low beta - A. B. C. D. Negative beta A. Manufacturer of everyday dairy products B. Biotech company awaiting FDA approval for their first drug C. Bankruptcy advisory services D. Jewelry retail chain that does best during economic expansion
1. Which risk management technique is best applied to a loss exposure that has a high frequency of occurrence and high severity when losses occur? risk transfer b. risk retention c. risk control d. risk avoidance 2. Claire workers for Travelers Insurance Company. Her job is to review applications for insurance, to decide whether Travelers should accept the applicant, and to assign acceptable applicants to the appropriate rating category. Claire is a(n) a. claims adjuster. c. underwriter. e....
6. Which company has the highest risk as measured by beta (b)? A. Merrill Lynch (beta= 1.5) B. Microsoft (beta = 1.2) C. Coca-Cola (beta = 1) D. Florida Power (beta 0.7) B. 5% bonds are issued by the U.S. (Federal) government A. Treasury B. Corporate vi brod- T o thong bao ) C. Municipal de los otro longobbat D. Foreign brod-Tool bords) moto mbalcodes 8. Which expected return would you prefer? nuo blow A. 0% ) trong bato blow...
Inflation, recession, and high interest rates are economic events that are best characterized as being a systematic risk factors that can be diversified away. b. company-specific risk factors that can be diversified away. c. among the factors that are responsible for market risk. d. risks that are beyond the control of investors and thus should not be considered by security analysts or portfolio managers. c. irrelevant except to governmental authorities like the Federal Reserve. Calculate the required rate of return...
1.The market risk premium is 7%, and the risk-free rate of return is 4%. The common stock of Northern Realty Shares has a beta coefficient of 1.5. Based on this information, what is the firm's cost of equity capital? 2.New Wave Tunes Inc., a company that operates syndicated radio stations in the North Eastern USA, issues debt with a maturity of 15 years. In the case of bankruptcy, holders of this debt will have claim to the intellectual property of...
B. MICFUELUNUML U C. idiosyncratic risk CD. systematic risk 0.5. Which of thes A. II,IV B. II,IV.v C. 1,111,1V ck A and Z have a correlation 05 D. 1,111, E. I, 3 Stock A and Stock B have a correlation Correlation-0.7, Stock A and Z have than a portfolio of story are an in is part of market A. Stock A and Z have a stronge CB. A portfolio of stock A and B P C C. Stock A and...
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...
Question 3 (25) Mats Ltd is a company that produces and sells welcome mats through a network of retail outlets Company management has decided that the company also needs an online presence and wants to raise capital to create a high quality online store and build warehouses for distribution purposes Currently, the company has R100 million in debt and R200 million in assets and R50 million of its equity is retained earnings, which management wishes to use before it issues...
1. Company X has ample excess cash flow on their last 5 income statements, but they do not pay a dividend to shareholders. Which choice below best represents why share holders would be OK with not earning a dividend? The company’s stock has grown by 40% this year The company issues a statement saying they do not believe in dividends The company can earn a greater return than the shareholder 2. Which of the following portfolios is most attractive to...
20. On September 13, 2005, the shares of Best Buy Co. fell $5.14 to $45.22 on the New York Stock Exchange, a decline of 10.2%. The decline followed the release of its second quarter 2005 financial results. Best Buy is a large North American retailer of consumer electronics and appliances, with over 700 stores in the United States and Canada, includ- ing the Future Shop chain. Best Buy reported earnings of 37 cents per share, compared with 30 cents for...