Standard deviation and beta both measure risk, but they are different in that   beta measures both systematic and unsystematic risk. beta measures only systematic risk while standard deviation is a measure of total risk. beta measures only unsystematic risk while standard deviation is a measure of total risk. beta measures both systematic and unsystematic risk while standard deviation measures only systematic risk. beta measures total risk while standard deviation measures only nonsystematic risk.

Q: Using a wrong formula for CAPM is a __  (select one) a. Erronous model risk b. Market data…

A: Introduction : In simple word, the capital asset pricing model (CAPM) is the valuation model used to…

Q: Risk can be subdivided into systematic and unsystematic risk. Describe each type of risk, the…

A: Systematic risk is the market risk or the undiversifiable risk of the asset which is unavoidable.…

Q: isk can be separated into undiversifiable risk and diversifiable risk. Discuss the difference…

A: In market there are many types of risk involved but broadly there are two types of risk…

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

A: systematic risk is beta

Q: As a risk measure, Expected shortfall is more accurate and reliable in comparison to Value-at-Risk.…

A: This is to compare and find out which one is more better among expected shortfall and Value-at-Risk.…

Q: Morningstar's Risk-Adjusted Rating most closely resembles which measure? The Treynor Index Jensen's…

A: Financial statements are statements which states the business activities performed by the company .…

Q: Assets A and B have identical betas and standard deviations equal to 0% and 10%, respectively. Which…

A: Asset A and Asset B has the same beta Beta A = Beta B Standard Deviation of A = 0% Standard…

Q: Standard deviation can be viewed as a measure of systematic and unsystematic risk combined True…

A: Standard deviation is the total risk of an asset or portfolio.

Q: In the context of the Capital Asset Pricing Model (CAPM), the relevant measure of risk is A.…

A: As per CAPM, Expected Return = Risk free Rate + Beta * Market Risk Premium

Q: Define the following types of risk and provide a specific Wells G&H example for of each Perceived…

A: Risk is the situation that arises in the future where the expected outcome is not similar to the…

Q: tement (M)?   a. M is based on the sample results.   b.   the larger M is, the lower the…

A: Tolerable Error Rate (TER) is the maximum acceptable rate of error sample results. TER = EPER + An…

Q: The efficient frontier measures risk by using: Group of answer choices B. Correlation A. Risk-free…

A: Efficient frontier refers to the graphical representation of the set of optimal portfolios…

Q: Define . Slope of SML and its relationship to risk aversion

A: Introduction: SML refers to security market line, it is a line indicating the relationship between…

Q: What is the difference between between beta and standard deviatio

A: In the world of finance in general and investing in particular we often use the concepts of beta as…

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: If two returns are positively related to each other, they will have a ________, and if they are…

A: In the given question we are given 4 options regarding a statement and we need to choose correct…

Q: A "risk-premium" is the difference between ___________________________ . A) the variance of a…

A: Solution:- Capital Asset Pricing Model (CAPM) is the equity model to determine the expected rate of…

Q: A financial risk is not possible to evaluate with Select one from the following options. mean value…

A: Financial risk is the risk or probability of loss made on an investment. There are various inputs…

Q: Market risk is referred to as:   systematic risk. total risk. diversifiable risk. asset specific…

A: Answer 1. Market risk is referred to as? Market Risk: When an investor might lose money because of…

Q: What type of risk is measured by the standard deviation?

A: Standard deviation is the measure of risk that the actual return of an investment will deviate from…

Q: The audit risk model consists of: AR = IR x R x DR. The detection risk is the dependent variable.…

A: Detection Risk dependent on the level of inherent risk and level of control risk. The relationship…

Q: What three techniques are used to assess stand-alone risk?

A: Stand-alone risk: Stand-alone risk is the risk related with the anticipated project cash flow. The…

Q: Beta and standard deviation differ as risk measures in that beta measures:a. Only unsystematic risk,…

A: Beta and SD (standard deviation), both are the indicator of the risks but the only difference is…

Q: CAPM accounts for a. Unsystematic risk b. Systematic risk c. Both Systematic and Unsystematic risk…

A: The question can be answered by determining the expected return for the stock using the capital…

Q: expected return and risk (measured by standard deviation) a

A: Portfolio is the combination of stocks, assets or securities. The combination of assets is…

Q: Distinguish between: Systematic risk and Unsystematic risk

A: The risks faced by the company arises from both micro as well as macro levels. The risk arising out…

Q: Why do some investors prefer to use Lower Partial Standard Deviations(LPSD) as compared to the…

A: Lower Partial Standard Deviations(LPSD)-          We mentioned this idea already. However, for…

Q: With regard to dynamic risk strategies, MGRM was subject to: Group of answer choices B.…

A: Answer : D Both A&B

Q: Discuss the Beta of  as measure of systematic risk.

A: In finance systematic risk refers to that risk which is inherent to the entire market. As the risk…

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: Standard deviation measures which type of risk?

A: Standard deviation is an important measure of risk in finance.

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: Beta is defined as the:    a. Amount of systematic risk in a risky asset relative to that in an…

A: Beta is an important concept in finance and important models such as capital asset pricing model…

Q: What is standard deviation? What type of risk does it measure

A: Standard deviation measures the risk of an investment regarding how it will fluctuate or deviate…

Q: The distinction between “pure risk” and “speculative risk” is important because only pure risks are…

A: “Fundamental risks” are those risks which affect a large segment of companies. But the risks which…

Q: Give an example of a risk that is clearly a diversifiable risk and one that is clearly a…

A: It refers to risk that can be eliminated through diversification. Those risks are firm specific,…

Q: The audit risk model consists of: AR = IR x CR x DR.  The detection risk is the dependent variable.…

A: Level of Detection Risk is dependent on levels of Inherent Risk and level of Control Risk. There is…

Q: As a risk measure, Expected shortfall is more accurate and reliable in comparison to Value-at-Risk.…

A: Introduction : The expected shortfall (ES) can be understood as the risk measure—a notion employed…

Q: One of the characteristics of an insurable risk is that a risk needs to be determinable and…

A: An insurable risk class is a group of people or businesses with similar characteristics that are…

Q: Non-sampling risk, and more specifically the risk of assessing control risk too low (risk of…

A: Non-sampling risk is the risk that auditors make an incorrect conclusion for any reason that is not…