Q: Explain what is the risk component of financial assets.
A: Risk can be described as the likelihood of an unexpected or negative outcome. Any act or activity…
Q: When investing for a long term, investors care about the volatility of A. mean, average B. mean,…
A: Volatility is used to measure the tendency of security in stock exchange wherein the security price…
Q: _______ is a measure of risk while _______ is a measure of risk and liquidity.
A: Capital budgeting is the process of distributing the resources(finance) of the organization in…
Q: Define the term Risk-free real return?
A: Risk-free real return is a hypothetical number that mirrors the foreseen return on a venture that…
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: xplain the difference between (a) stand-alone risk and (b) risk in a portfolio context. How are they…
A: Stand-alone In terms of how they are calculated and analyzed, risk and portfolio risk are not the…
Q: o risk premiums influence financial decisions regarding risk and re
A: Step 1 A risk premium is an investment return that is expected to generate more than the level of a…
Q: What is the price volatility component of daily earnings at risk?
A: The acronym DEAR stands for Daily-earnings at risk. To understand the price volatility component,…
Q: What is financial risk, and how does it arise?
A: Answer: Usually, financial risk refers to a situation where a company is not able to pay its fixed…
Q: Q3. Explain the following A) Measure of historical returns (Single Asset) B) Measure of historical…
A: Return= Total gain/loss on an asset over a given period of time.
Q: Compare long-term instruments and short-term risks, in terms of the various types of risk to which…
A: Interest rate risk is the likelihood that the value of a fixed-rate debt instrument may fall when…
Q: Define the term exposure to financial risk?
A: The question is based on the concept of Financial risk and its exposure.
Q: How do investors account for risk when determining an asset’s value?
A: Asset valuation helps to determine the fair value of the asset. Various asset valuation models such…
Q: When is a gain or a loss from a cash flow hedge reported in earnings?
A: Cash flow hedge: If a company uses any derivative to cover the risk due to cash flow changes to…
Q: Capital asset pricing theory asserts that portfolio returns are best explained by:a. Economic…
A: Capital Asset Pricing Theory is used to determine the relationship between the systematic risk of an…
Q: Define each of the following terms: g. Repatriation of earnings; political risk
A: Repatriation means the conversion to a single domestic currency of any foreign currency.…
Q: When adding real estate to an asset allocation program that currently includes only stocks, bonds,…
A: The question is based on the concept of risk of portfolio, which different asset class. The…
Q: Basic Elements of Risk-Adjusted Returns?
A: Introduction: Risk adjusted return is a methodology for calculating and evaluating the returns on an…
Q: In the capital asset pricing model, the general risk preferences of investors in the marketplace are…
A: Capital asset pricing model is used to calculate the expected returns on the investment made by the…
Q: What are the quantitative characteristics of the assets and how to measure them?
A: An economic resource that helps the businessman to conducting business activity effectively and…
Q: What is risk and how is it measured? How is risk measured in a portfolio compared to risk in a…
A: Risk is measured by the amount of volatility, that is, the difference between actual returns and…
Q: What is investment? How time value of money, inflation and expected risk Q1. effects investment…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: What is forecasted financial statements (FFS) method?
A: forecasted financial statements (FFS) method is a corporate financial strategy. Financial forecasts…
Q: What is relationship between the returns on an asset and returns in the whole mark
A: A market portfolio is a theoretical concept that means a portfolio that consists of all the stocks…
Q: Make a simple example of the following: a. Capital Gain (or Losses) b. Expected Return c. Real…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Why doesn’t an estimated absolute covariance number tell the investor much about the relationship…
A: Sample Covariance means the in which the investor has not much information about the rate of return…
Q: A reasonable probability that an investment will produce a loss a. risk b. value c. specualtion…
A: There are several investment styles through which one can generate profits or build wealth.
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 does mean "Marketable securities" in the current asset of a balance sheet?
A: Current Assets are those assets from which the organization can derive economic benefits within one…
Q: Forward P/E = Market capitalization/ forecasted income
A: There are two types of P/E ratios 1) Trailing P/E ratio 2) Forward P/E ratio Trailing P/E ratio…
Q: Why are equity investments initially recognized at cost and valued differently at a subsequent…
A: Equity investments are those investments which are made by one person in some other company by…
Q: While the Weighted Average Cost of Capital reflects the risk perceived by in investors the…
A: The real risk is the market place risk perception. It helps in the determination of the price of…
Q: The present value of an investment's future cash flows divided by its initial cost is the: O Net…
A: The present value of an investment is calculated by applying the time value of money concept to the…
Q: Should stockholder wealth maximization be thought of as a long-term goal or a short-term goa
A: Answer: The stockholders are the investors in the public company that is an open company. The…
Q: nually. Investors required rate of return is ce
A: Coupon rate =8.47% T=7 Face value=50,000 Price=45,000 Yield to maturity = C +(face value…
Q: escribes the relationship between risk and return.
A: Risk and return are directly related.
Q: A primary strength of the net present value method for analyzing investments is that it accounts for…
A: Net present value method means where the cash inflow has been discounted at given rate of interest…
Q: itrage? a. Liquidity prefe b. Expectation th C. Preferred habi
A: Step 1 Arbitrage is a type of trading in which a tiny price differential between equivalent assets…
Q: Would you expect positive covariances of returns between different types of assets such as returns…
A: Covariance is the measure of the degree to which two variables move together relative to their…
It is the uncertainty of future returns
A. value
B. speculation
C.
D.risk
Step by step
Solved in 2 steps
- Make a simple example of the following: a. Capital Gain (or Losses) b. Expected Return c. Real Return d. Risk-free Return e. Required Return f. Holding Period ReturnA reasonable probability that an investment will produce a loss a. risk b. value c. specualtion d. capital gainWhich of the following is an idicator of financial risk ? a) Net Sales / Total Assets b) Total Liabilities / Equity c) Return on Assets d) Return on Equity
- Explain the difference between (a) stand-alone risk and (b) risk in a portfolio context. How are they measured or calculated, and are they relevant to investors?Define the term exposure to financial risk?how the cost of capital serves as a screening tool when dealing with the net present value method and the internal rate of return method.
- Basic Elements of Risk-Adjusted Returns?Assets are priced such that _____________________ increase with the riskiness of future payoffs. A) expected returns B) realized returns C) non-refundable returns D) regulated returnsThe desired rate of return on an investment should reflect the degree of risk involved. A. True B. False