How does the Broader Diversification Reduce Risk?

Q: Explain the Risks of Global Investment?

A: The investment which is trending in American companies is a global investment. It forms a smaller…

Q: What are the sources of risk associated with project development?

A: Variations in returns of an investment from its expected returns are called risk. The risk of an…

Q: What is the Joint Hypothesis and what are its implications for tests of asset pricing models?

A: The Capital Asset Pricing Model (CAPM) is a model that explains the relationship between expected…

Q: Can the Broader Diversification Increase Expected Return?

A: The concept of portfolio diversification is nothing but including unrelated assets in the…

Q: What is the significance of the Value at Risk (VaR) method?

A: The question is based on the concept of Value at Risk (VaR). VaR is a statistical measure of risk in…

Q: Discuss how diversification reduces firm specific risk.

A: Diversification is investing money in many investments rather than a single investment. In…

Q: What is the Aggregating Risk over Time?

A: Aggregating Risk over time is the measure of a solitary customer's presentation of a foundation or…

Q: why does related diversification strategy and unrelated diversification strategy often fail

A: A business organization, entering into a new market where they do not have business with and create…

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 some actions that companies can take tominimize or reduce risk exposures?

A: The following are the actions utilized by companies to reduce exposure of risk: A company can…

Q: How can we reduce investment risks by asset diversification?

A: Answer: Diversification is nothing but the strategy that reduces the risk by allocating assets 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: Define diversification

A: DiversificationIt is a strategy for the management of risk. Allocating the resource in the different…

Q: Define diversifiable risk

A: Diversifiable risk It is special to a given business or industry. Regularly known in the feeling of…

Q: Explain Diversification Benefits with example?

A: Following are the benefits of diversification: Reduce the risk of loss: Portfolio diversification…

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

A: The risk premium is the extra risk-free return to require the risk of project acknowledgment. This…

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: How Broader Diversification Increases Expected Return?

A: The expected return on an investment refers to the weighted average of estimated returns and…

Q: Explain risk-neutral valuation

A: A risk-neutral valuation is a probability measure used to help pricing derivatives and other…

Q: Why is the additional risk not taken without expected additional return?

A: The risk-return tradeoff takes note of that the potential return increments with an expansion in…

Q: What are the risks of global investment?

A: The risks of global investment are as follows: Currency risk: The risk related with the foreign…

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: Why does riskiness increase with time?

A: Risk can be said as that difference that arises which arises on expected outcome or investment's…

Q: Which are the benefits of diversification?

A: The question is based on the concept of diversification. Diversification is a technique to spread…

Q: How does/can a financial intermediary reduce the risk facing them due to Adverse Selection?

A: The question is based on one of the key issue in financial market, banking industry,  about the…

Q: What are the differences between bottom-up and top-down approaches to security valuation? What are…

A: A top-down method to security evaluation starts with an examination of the worldwide and national…

Q: How can diversification reduce risks? Give examples from the rea world

A: Diversification is the process of managing risk which mixes the individual investments in a…

Q: How should firms evaluate projects with different risks?

A: Project evaluation is carried out by organization to know if a particular project is suitable for…

Q: What is commercial risk?

A: In financial terms, risk is defined as the possibility that the real profits from an outcome or…

Q: Explain Broader Diversification Reduces Risk?

A: The investment in different financial assets is known as the portfolio of an investor. The…

Q: How to minimize or eliminate risk using diversification or other means.

A: Diversification is a process investment in multiple assets with the available amount.

Q: Question 2 | What conditions must exist for diversification to be an effective risk response? How…

A: Diversification is a risk management strategy or approach in which a portfolio has a diverse set of…

Q: what should a rebalancing strategy include from a naive diversification perspective?

A: Investors can use rebalancing to ensure that their portfolio remains aligned with their desired risk…

Q: What is idiosyncratic risk? How does it differ from market risk?

A: Idiosyncratic risk or unsystematic risk or specific risk is that risk which belongs to specific…

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: Explain Global Diversification?

A: The question is based on the concept of diversification in global market. Diversification is a…

Q: What are pros and cons of diversification strategy?

A: A business organization, entering into a new market where they do not have business with and create…

Q: It is possible to eliminate all risk by diversification? Explain your answer

A: Diversification is a technique used to reduce risk by investing in variety of assets. It is a risk…

Q: Discuss how diversification can enhance risk reduction?

A: Introduction : Diversification can be understood as the act of distributing resources in such a…

Q: The type of the risk that can be eliminated by diversification is called

A: the type of the risk that can be eliminated  by diversification is called