Can the risk premium be negative after an investment is undertaken or before?

Q: How is the risk-adjusted discount-rate approach more commonly practiced in the real world?

A: Risk adjusted discount rate approach is an approach which is used in assessment of various long-term…

Q: Clearly explain the difference between systematic risk and non-systematic risk and  discuss the…

A: Risk is the possibility of loss to a company due to unforeseen circumstances. Beta is the measure of…

Q: What does a failed net-investment test indicate?

A: Answer: Net investment test: The company will not overdraw at any stage on its return, and is thus…

Q: What is a satisfiable investment? When the present value of benefits surpasses the cost of an…

A: This question explains about the present value of benefits surpasses and the cost of an investment…

Q: Explain the difference between systematic and unsystematic risk. Also explain why one of these types…

A: Financial markets are full of financial risks because these markets are related to the trade of…

Q: risk-taker (likes to take risks) type of investor prefer equities over fixed income?

A: Most of investors invest in the equity and like to take high risk and would invest in stock market.

Q: If you introduce a risk free asset in your portfolio of risky assets; how will this change the shape…

A: In any portfolio there are two types of risk; risk from general market conditions and risks from…

Q: Does a greater risk imply a bad investment?

A: Risk is the degree of uncertainty about the expected return from an investment. It is the…

Q: The desired rate of return on an investment should reflect the degree of risk involved. A.   True…

A: Riskier investments may give higher returns to the investors as they provide favorable ratio of risk…

Q: Why a risk taker (likes to take risk) type of investor prefer equities over fixed income?

A: Risk takers are the individuals who are willing to take risk besides the consequences comes with it.…

Q: How would the risk premium work out for a riskier investment?

A: A risk premium is a return on venture over the hazard free rate a financial specialist requires to…

Q: What are the real risks of an adverse financial outcome, especially in the short run?

A: Risk is the important factor of investment decisions to explain the capability of an investor to…

Q: What is the y risk-free investment?

A: Risk-free rate of return is the rate of return that an investor expects from an investment in any…

Q: sk is the potential for an investment to generate more than one return. A security that will produce…

A: While investment there are potential risk to the investment due to which return realized vary…

Q: If an investor prefers  investment with higher  risk , regardless to the return then he is following…

A: Risk awareness strategy is defined as the raise in an understanding in the existence of the risks…

Q: Does greater risk imply a bad investment?

A: Risk assessment is the process for identifying and assessing risks associated with achieving your…

Q: What is risk, and how does it affect decisions about investment?

A: Risk and return are related to each other while making investment.

Q: What makes the risk-adjusted discount rate approach appealing?

A: Answer: The approximation of the present cash value for high risk assets is called adjusted discount…

Q: In the context of CAPM, a risky asset with negative beta (beta<0) will have a positive expected…

A: CAPM describes the relationship between risk of security and expected return. CAPM is the expected…

Q: Do you believe on the principle-higher risk provides higher return? Can we achieve high return with…

A: Return is the reward which an investor will get by investing money in return and risk is the chance…

Q: How is it possible to achieve a higher rate of return without significantlyincreasing risk?

A: As we all learnes till now that higher the risk provides higher return and if we want the high…

Q: How does the diversification of an investor’s portfolio avoid risk?

A: Portfolio investments mean investments in the group of assets, securities, bonds, etc. Investments…

Q: How can an investor eliminate Unsystematic Risk?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk. Systematic risk is non…

Q: estment with higher risk, regardless to the return then he is following a strategy. O a. risk-aware…

A: Here, it is required to identify the correct option.

Q: Is it true that the the wider the risk premium, the lower the price of a expected future cash flow?

A: Risk premium is the return the stock gives over the risk free asset. risk premium = Rs-Rf Wider risk…

Q: of investor prefer fixed income

A: Risk-Averse-: Some investor who is a Risk-Averse has the trait of inclining toward preventing loss…

Q: Explain if the operational risk is considered a risk or uncertainty? Why? If it is a risk, how can…

A: Operational Loss:   The risk involved in failures of Man, Machine, Material, and Methods during…

Q: How can an investor eliminate Systematic risk?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk

Q: How does the risk return trade-off relate to the financial manager's main goal?

A: The main goal for a financial manager is to generate the maximum value of the firm to its owners.…

Q: identify the assumptions underlying the interest coverage ratio appropriate measure for analyzing…

A: The interest coverage ratio is a debt ratio and profitability ratio used only to calculate how…

Q: discuss the importance of considering risk when analyzing investments?

A: Risk refers to the probability of uncertainties about future .Risk may also be termed as volatility…

Q: What is the difference between a diversifiable riskand a nondiversifiable risk? Should stock…

A: The diversifiable risk or unsystematic risk: It may be a kind of risk particular to a given economy,…

Q: NOT right for the buy-and-hold investment strategy?

A: Strategy refers to the plan which is followed by the managers to achieve the goals of an…

Q: advantages of negative interest rate policies?

A: There are pros and cons of negative interest rate policies. In fact, in my opinion negative interest…

Q: What are the similarities and differences between the CML and SML as models of the risk return…

A: CML is an abbreviation for Capital Market Line and SML is an abbreviation for Security Market Line.…

Q: 1. Define the components of holding period return. Can any of these components be negative? 2. How…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: The risk-adjusted discount rate reduces investment. True or false?

A: The estimation of the present value of cash for high-risk investment is known as a risk-adjusted…

Q: Is the investment risk concerned with the range of possible outcomes from aninvestment?

A: For a business, there are many types of risks associated with it. Some of the risks are credit risk,…

Q: When adding a risky asset to a portfolio of may risky assets, which property of the asset has a…

A: Portfolios can consist of a variety of investments such as equities, bonds, commodities, cash and…

Q: Why are investors risk-averse? How can investors deal with different degrees of risk?

A: In the world of investment, the risk is price volatility. A volatile investment may either make you…

Q: Explain the following statement: “An asset held as part of a portfoliois generally less risky than…

A: An investment is refer as an asset purchased with intention to earn income at some time in future.…

Q: Which of the following Incoterms (EXW, FCA, DPU, DAP) are in favor of the buyer in terms of risk?…

A: FOLLOWING INCOTERMS- EXW -EX WORKS FCA-FREE CARRIER DPU-DELIVERED AT PLACE UNLOADED DAP-DELIVERED AT…