FIN 320 MODULE 4 CASE STUDY

Ford Motors Corporation (F) General Motors Company (GM) Which company has a higher: Systematic Risk? Total Risk? Unsystematic Risk?

Which one of the following statements is correct concerning unsystematic risk? An investor is rewarded for assuming unsystematic risk. Beta measures the level of unsystematic risk inherent in an individual security. Eliminating unsystematic risk is the responsibility of the individual investor. Standard deviation is a measure of unsystematic risk. Unsystematic risk is rewarded when it exceeds the market level of unsystematic risk. оо O O

QUESTION  Hedging is a risk management strategy that is used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies.   REQUIRED: Discuss the importance of hedging to the financial risk manager Are there any downside to hedging?

What type of risk is the risk that belongs to the market as a whole?     Systematic risk     Unsystematic risk (or nonsystematic risk)     Total risk

16 This type of risk is related to overall market or the economy and it is Non-diversifiable. However, this risk could be reduced through risk mitigation and transferring technique*         A. Unsystematic risk       B. Systematic risk       C. Financial risk       D. Fiduciary risk

Please select the risk that affect only a single company? market risks. specific risks. systematic risks. risk premiums.

9.1 q3- Which of the following statements is FALSE? Select one: a. Systematic risk is also known as common risk. b. Systematic risk is also known as market risk. c. Systematic risk is also known as undiversifiable risk. d. Systematic risk is also known as independent risk.

Which of the following is an example of diversifiable risk? a) Interest rates rising b) A stock market crash c) A company's CEO being arrested for fraud d) A terrorist event like 9/11

List which of the following statement(s) concerning risk are correct? 1. Nondiversifiable risk is measured by beta. II. The risk premium increases as diversifiable risk increases. III. Systematic risk is another name for nondiversifiable risk. IV. Diversifiable risks are market risks you cannot avoid.

What type of risk is the risk that is unique to an individual firm?     Systematic risk     Unsystematic risk (or nonsystematic risk)     Total risk

8. Fluctuations of a security's return that are due to market-wide news representing common risk is the ________.   A. Idiosyncratic risk   B. Systematic risk     C. Unique risk   D. Unsystematic risk

Value at Risk (VaR) is a statistical measure of maximum loss used by banks and other financial institutions to manage risk exposures. True or False

Hedging is a risk management strategy that is used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies.   REQUIRED: Discuss the importance of hedging to the financial risk manager Are there any downside to hedging?

q3- Which of the following statements is TRUE? Select one: a. Unsystematic risk is also known as undiversifiable risk. b. Unsystematic risk is also known as common risk. c. Unsystematic risk is also known as independent risk. d. Unsystematic risk is also known as market risk

Statement I: Systematic risk is the inherent certainty in the market which cannot be diversified. Statement II: Unsystematic risk is the inherent certainty in the company which can be diversified. Statements I and II are true. Statement I is true. Statement II is true. Statements I and II are false.

The calculation of an investor's Risk Aversion (A) requires us to look at that individual investor's historic behavior in his/her investing history. Why is Risk Aversion also called "price of risk"? Group of answer choices Risk Aversion measures the risk premium that the investor has required for the Capital Market Line Risk Aversion is determined by the excess return over the risk-free asset, as required by the investor Risk Aversion measures the difference in returns required by the investor in the Capital Allocation Line versus the Capital Market Line Risk Aversion measures the amount of return that the investor has required for each unit of risk taken None of the above

Which of the following is/are an examples of unsystematic risk of a stock   O a Political risk   Ob. Operating risk   Oc Inflation risk   Od. Interest rate risk

Give each risk one situational example Basic risk Capital risk Country risk Default risk Delivery risk Economic risk Exchange rate risk Interest rate risk Liquidity risk Operations risk Payment system risk Political risk Refinancing risk Reinvestment risk Settlement risk Savereign risk Underwriting risk.

Statement 1: Fundamental analysis is a method of forecasting future price movements of a security based onpolitical, environmental and other specific factorsStatement 2: Fundamental analysis is a method that study the past market data such as prices and volumeStatement 3: Fundamental analysis generally uses top down approachStatement 4: Fundamental analysis views from the chart and afterwards reviews the company, industry, financialmarkets, economy, and the conditions affecting the security.Statement 5: Fundamental analysis can be best employed for short-term trading because data can be easilyutilized and come out periodically a. Only statements 1 and 3 are correct b. Only statements 2 and 4 are correct c. Only statements 1 and 2 are correct d. Only statements 3 and 4 are correct

Inflation, recession, and high interest rates are economic events which are characterized as: A. Company-specific risk that can be diversified away. B. Systematic risk that can be diversified away. C. Diversifiable risk. D. Market risk. E. Unsystematic risk that can be diversified away.

Plz solve!!