FIN 320 Journal 6-2

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

1. Which of the following statements are true?a. The value of any investment is based on the cash flows it is expected to generate in the future.b. Investors are not generally risk averse.c. Uncertain cash flows are preferred to certain cash flows.d. All of the above are true.e. None of the above are true. 2. A basic knowledge of finance will help you with your personal investments by helping you understanda. how to accurately predict changes in the short-term interest rates.b. how to determine the optimal dividend policy for each firm.c. how to determine which technology is most likely to be accepted by consumers.d. how to review companies and industries to determine their prospects for future growth and therisk inherent in those companies and industries.e. how to predict the growth in sales for the firm.  3. Which of the following events would make it more likely that a company would choose to call itsoutstanding callable bonds?a.A reduction in market interest rates.b.The company's…

Answer quickly After making an investment, an investor learns that Intel stock is now undervalued. This is an illustration of a. Market Interruption  b. Portfolio Management  c. Security Analysis  d. Asset Allocation

True or false no need explanation  1. The shorter your time horizon , the less conservative you should be in investing your money. 2.If there is a little amount of risk in your investment, there will also a relatively little potential amount of return. 3.Your personality should be considered in making an investment 4. An investors financial position will also affect his or her objectives .

No risk, no reward. Most people intuitively understand that they have to bear some risk to achieve an acceptable return on their investment portfolios. But how much risk is right for you? If your investments turn sour, you may put at jeopardy your ability to retire, to pay for your kid's college education, or to weather an unexpected need for cash. These worst-case scenarios focus our attention on how to manage our exposure to uncertainty. Assessing and quantifying-risk aversion is, to put it mildly, difficult. It requires confronting at least these two big questions. First, how much investment risk can you afford to take? If you have steady high-paying job, for example, you have greater ability to withstand investment losses. Conversely, if you are close to retirement, you have less ability to adjust your lifestyle in response to bad investment outcomes. Second, you need to think about your personality and decide how much risk you can tolerate. At what point will you be unable to…

Please answer 2'3 and 4 only

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Risk and Return Use the Internet or Strayer University Library databases to research instances of when a company's stock prices are affected more by long-term or short-term performance. Post a Response Determine whether stock prices are affected more by long-term or short-term performance. Provide an example of the effect that supports your claim. Respond to a Peer Be sure to respond to at least one of your classmates' posts. Read a post by one of your peers and provide a substantive response, making sure to extend the conversation by asking questions, offering rich ideas, or sharing personal connections.

basic economics can give us the sniff test. It provides us with a basic set of rules to which any decent investment advice must conform." These "set of rules" include all of the below EXCEPT THIS ONE. Which of the below is NOT one of these rules for wise investment? Group of answer choices   Invest for the long run.   Take risk, earn reward,.   Engage in high risk short-term trading.   Diversify your investments.

You believe you have found a trading strategy that could make significant profits. It requires looking at analyst forecasts and purchasing stock where therehas been an upgrade in the recommendation and selling shares where there has been a downgrade in the recommendation.a. Describe which form the Efficient Market Hypothesis will be viola ed if you are able to make significant profits from your trading strategy in the future.b. List three factors that you may be overlooking in assessing the profitability of your trading strategy.

what better to suggest in investing, to invest in a low risk outlet such as the money market or to a high risk outlet such as equity?

The efficient markets hypothesis True or False: The efficient markets hypothesis holds only if all investors are rational. False   True     Almost all financial theory and decision models assume that the financial markets are efficient. The informational efficiency of financial markets determines the ability of investors to “beat” the market and earn excess (or abnormal) returns on their investments. If the markets are efficient, they will react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency that reflect what information is incorporated in stock prices. Identify the form of capital market efficiency under the efficient market hypothesis described in the following statement: Current market prices reflect all information contained in past price movements.   This statement is consistent with: Strong form efficiency   Semistrong form efficiency   Weak form efficiency…

QUESTION 1 (a) Elaborate on business risk and financial risk. Suppose Firm A has greater businessrisk than Firm B. Therefore, Firm A should have a higher cost of equity capital.Justify.(b) Gigi considered constructing a portfolio for herself, discuss which school of thoughtwould be practical for her portfolio, the Traditional or Modern Portfolio Theory.(c) Dividends are important, but at the same time, dividend policy is irrelevant. Justify.

what better to suggest in terms of investing, to invest in a low risk outlet such as the money market or to a high risk outlet such as equity?

Plz solve!!

Assessing Your Risk Tolerance Your emotional make-up plays a significant role in how you create your investment mix. Intellectually, you may accept that stocks and bonds should be a major part of your investment mix. Emotionally, however, you may not be comfortable with the sometimes wild roller-coaster ride of the stock and bond markets. There is no simple scale to measure your tolerance (or intolerance) for short-term risk. For some investors, a "conservative" stance is investing half of their money in stocks; for other investors, it means avoiding stocks altogether. By asking yourself a few simple questions, you may discover the type of investor that you should consider yourself. Do market fluctuations keep you awake at night? Are you unfamiliar with investing? Do you consider yourself more a saver rather than investor? Are you fearful of losing 25% of your assets in a few days or weeks? If you answered "yes" to these questions, you are likely to be a "conservative" investor. Are…

Which of the following statements concerning the Efficient Market Hypothesis is correct? Select one: a. Stock market prices are based on speculation not on underlying information   b. New information that confirms investor expectations should change stock prices c. Stock prices should slowly respond when unexpected information becomes available d. Careful research can help investors earn abnormal profits e. Your return on investment should reflect the riskiness of your portfolio

Give typing answer with explanation and conclusion

Pdr

Give typing answer with explanation and conclusion Nelson is faced with a conundrum as a hedge fund manager. He could choose to invest a new client’s wealth in a fairly new and conservative opportunity, but this option has no track record that can be relied on. On the other hand, he could invest it in a copper mine that is seeking capital to expand its infrastructure as there may be a boom in this industry in the near future. From the scenario provided, which key concepts are present? (Exercise caution when answering this question as multiple responses may be correct.) 1. Return 2.Reward 3. Investment 4.Risk 5.Uncertainty

4. Portfolio expected return and risk Aa Aa A collection of financial assets and securities is referred to as a portfolio. Most individuals and institutions invest in a portfolio, making portfolio risk analysis an integral part of the field of finance. Just like stand-alone assets and securities, portfolios are also exposed to risk. Portfolio risk refers to the possibility that an investment portfolio will not generate the investor's expected rate of retum. Analyzing portfolio risk and return invalves the understanding of expected returns from a portfolio. Consider the following case: Andre is an amateur investor who holds a small portfolio consisting of only four stocks. The stock holdings in his portfolio are shown in the following table: Percentage of Expected standard stock Portfolio Return Deviation Artemis Inc. 20% 8.00% 27.00% Babish & Co. 30% 14.00% 31.00% Cornell Industries 35% 11.00% 34.00% Danforth Motors 15% 5.00% 36.00% what is the expected retum on Andre's stock…

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?

Acting as a financial adviser one of your duties is to create a balance of stocks and bonds that are tailored to the risk tolerance of your client. This means, some people want riskier balance with the goal of making more money, while others will take a lower risk to be safer with their investments. Your client has informed you that they have a desired average risk of 6.381 and have $6539.19 to invest in your suggested stocks and bonds. They also want tripple the number of shares of MAT compared to BUS. You have selected: Stock MAT which has a risk of 5.8 and costs $34.54 per share. Stock BUS which has a risk of 8.4 and costs $27.09 per share. Bond SAFE which has a risk of 3 and a cost of $33.6 per share. You have determined you should buy shares of MAT, shares of BUS, and shares of SAFE.

When a firm invests in money market instruments, it is taking _______ and should expect __________.   Question 6 options:   1)  high risk, high returns   2)  high risk, low returns   3)  low risk, low returns   4)  low risk, high returns