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- What does the volatility value represents?Compare and contrast the risk versus expected rate of return tradeoff, the security market line, and determination of beta on this basis. Include explanation of all the constituents, namely security market line, risk measure, expected rate of return, risk-free rate of return, and market rate of return. Include hypothetical examples for better clarity. What is the weighted average cost of capital (WACC) and its significance?_______ is a measure of risk while _______ is a measure of risk and liquidity. NPV; IRR IRR; NPV PI; payback Payback; PI
- The Capital Asset Pricing Model (CAPM) describes a relationship between the expected return of,,, a)An individual share and its variance risk b)An individual share and its standard deviation risk c)An individual share and its undiversifiable risk d)An individual share and its diversifiable riskWhat is a characteristic line? How is this line used to estimate a stocks beta coefficient? Write out and explain the formula that relates total risk, market risk, and diversifiable risk.The slope of the Security Market Line equals to ____, and the slope of Capital Allocation Line equals to____. Select one: A. Beta; Sharpe Ratio B. Market Risk Premium; Sharpe Ratio C. Risk free rate; Volatility D. Market Risk Premium; Volatility
- The VIX measures Select one: a.Realized volatility B. Current volatility C. Historical volatility D. Implied volatilityCritically discuss the application of EWMA, GARCH and asymmetric GARCH models to volatility estimation in financial engineering.Compare and contrast the risk versus expected rate of return tradeoff, the security market line, and determination of beta on this basis. Include explanation of all the constituents, namely security market line, risk measure, expected rate of return, risk-free rate of return, and market rate of return. Include hypothetical examples for better clarity. What is the weighted average cost of capital (WACC) and its significance? Can you think of two hypothetical examples for better clarity?
- What is the difference between CAPM beta and cash-flow beta (from certainty equivalency approach)? Thank you!Which one of the following is most closely related to the net present value profile? A: Payback B: Discounted payback C: Profitability index D: Average accounting return E: Internal rate of returnWhat is the CAPM beta? How is it different from Cash Flow beta? Provide intuitive explanation and formulae for both.
