For which type of risk do you get rewarded with a higher expected return? a. Firm-specific risk b. Total risk C. Diversifiable risk d. Unknown Systematic risk

Q: What must be true about the sign of the risk aversion coefficient, A, for a risk lover? Draw the…

A: The question is based on the concept risk attitude of investors in financial economics, there are…

Q: Explain how knowing the standard deviation of a security’s historical returns increases an…

A: The question is based on the concept, which establish relation between return and risk for…

Q: A security with only diversifiable risk has an expected return that exceeds the riskfree rate of…

A: Unsystematic risk is another term for diversifiable risk. The risk that may be quantified and…

Q: Which of the following risks can be eliminated through diversification? a. Systematic risk b.…

A: Idiosyncratic risk is a risk for a particular investment or company. It is also called unsystematic…

Q: Which of the following statements is true? Select one: Total risk = market risk + unique risk.…

A: systematic risk is beta

Q: Present value is based on the concept of:   a. discounting.   b. duration.   c. systematic…

A: Present value means how much the value of future money worth today. The amount received today will…

Q: which of the following quantifies how closely a manager's return pattern follows that of a benchmark…

A: Managers' performance is evaluated on the basis of pattern that follows with benchmark index.

Q: w does expected shortfal

A: Introduction : Value at risk (VaR) can be understood as the metric that measures the magnitude of…

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: Standard deviation is measure of total risk while BETA is measure of systematic, undiversifiable…

A: Because you have asked multiple questions, we will solve the first question as per policy. Request…

Q: What is security Market Line (SML)? How it explains risk-return relationship? Explain different…

A: What is security Market Line (SML)? The security market line can be understood as a tool for…

Q: Which is risk in the context of financial decision making and performance? Does performance…

A: Risk in the perspective of financial decision making and performance differs as the company faces…

Q: Some financial theorists consider the variance of the distribution of expected rates of return to be…

A: The variance of expected rates of returns describes a measure of the dispersion of real/actual…

Q: What is the risk free return?

A: Rate of return is the return percentage which an investor gets from the money which has been…

Q: Using examples, explain how firms are affected by both systematic and firm-specific risk. What is…

A: There are two types of risk systemic risk and firm specific risk.

Q: which of the following headings best describes and measures gearing : a- financial position (risk)…

A: Gearing ratio is a financial ratio which compares equity of a company to its debt. Gearing ratio =…

Q: Which of the following statements is true for compensation of risk? a. Higher the risk, lower is the…

A: The Statement for compensation of risk is as under-

Q: Basic Elements of Risk-Adjusted Returns?

A: Introduction: Risk adjusted return is a methodology for calculating and evaluating the returns on an…

Q: Describe the relation between Risk and Returns that was introduced by Harry Markowitz

A: Modern portfolio theory, or MPT, is referred to as the method for portfolio management for reducing…

Q: iation of a security’s historical returns increases an investor’s underst

A: A standard deviation is a tool used in finance to measure the volatility and risk associated with a…

Q: What is risk return ratio?

A: Any susceptibility a corporation or organization has to factors that might affect profitability or…

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: What is definitions of this?   Systematic risk  Risk free rate of return  Market rate of…

A: Capital asset pricing model (CAPM) can be used to compute the return expected by the investors by…

Q: What is the relationship of risk to the investment?

A: There is a direct relationship between risk and return in investment decision making. It means…

Q: What is meant by the phrase natural hedging againstexchange rate risk?

A: Hedging is a mechanism that is used to eliminate or minimize the risk of loss that is associated…

Q: Explain Comparing Risk Premiums?

A: Risk premium is additional premium an investor achieves by investing in a riskier financial…

Q: Risks that are insurable because their probabilities can be calculated precisely enough for the risk…

A: An insurable risk, that might comprise possibility of loss that is unexpected and outside the…

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: Explain the difference between financial risk andbusiness risk.

A: Risk is referred as the chance of loss. An activity which leads to loss is termed as risk. The risk…

Q: Standard deviation measures which type of risk? Select one: a. Total b. Non diversifiable c.…

A: STANDARD DEVIATION IS USED AS AN INDIACATOR OF MARKET VOLATILITY AND THUS OF RISK .

Q: The lower the standard deviation of returns on a security, the _____ the expected rate of return and…

A: The standard deviation of returns is a measure of volatility or risk.

Q: b) Give a graphical example to present the positioning of. E Systematic risk E Risk free rate of…

A: Risk is the uncertainty associated with an investment. The investor receive higher return to…

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: What is the relationship between risk and return?

A: Risk return relationship: The association among risk and return is recognized as the risk-return…

Q: The probability distribution of a less risky return is more peaked than that ofa riskier return.…

A: Probability distribution: The probability distribution is a tool of statistics that signifies…

Q: What does the term risk aversion mean, and howis risk aversion related to the expected return on…

A: Introduction: Risk can be characterized in terms of the uncertainty of future consequences resulting…

Q: What is the difference between Beta and Standard Deviation as a measure of risk?

A: Risk can be divided into two categories- unsystematic risk and systematic risk. Risk is measured in…

Q: escribes the relationship between risk and return.

A: Risk and return are directly related.

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…

Q: Illustrate investment risk?

A: Investment risk is the risk associated with the probability of losses occurring in relation to the…