State Depression Normal Probability 3 Stock ABC -10 10 Stock DEF 14 -.04 12 Boom What is the standard deviation of return for Stock DEF? 0650 0837 0150 0694 1286 08

Q: Describe the approaches for Comparing Defender and Challenger?

A: The following are the approaches for comparing defender and challenger: Cash flow approach: Treat…

Q: What is meant by risk? Why must it be managed properly?

A: Risk can be defined as the probability of an event occurring and having consequences. Standard…

Q: What is meant by the term antidilution? Give an example.

A: An increase in the earnings per share refers to anti-dilution. This results on account of the…

Q: Provide a working definition/description of stakeholder theory, and detail and discuss the strengths…

A: The definition of Stakeholders theory and its strengths and weaknesses are also discussed hereunder…

Q: Information that has the ability to make a difference in the decision-making process is known to…

A: Lets understand the basics. For decision making, information should posses following…

Q: Decision-usefulness approach focuses on the relevance of information being communicated.” Explain…

A: The decision-usefulness approach is a fundamental concept in financial accounting that emphasizes…

Q: e the use of pro forma statements in informed decision-making?

A: Step 1When it comes to accounting, pro forma statements are the financial statements of your…

Q: Describe the analytical model for ethical decisions.

A: It is a process of assessing and picking among choices in a way steady with moral standards. In…

Q: This enhancing characteristic requires that users be well-informed and diligent for information to…

A: Relevance: Relevance refers to how helpful the information is for the financial decision-making…

Q: What is a reasonableness test?

A: Reasonableness tests is an analytical procedure used to examine the validity of the accounting…

Q: ead

A: Explanation : In simple words, asymmetric information refers to the situation under which one entity…

Q: List the common biases and errors in decision-making. Provide suggestions for how to avoid falling…

A: There are many errors and biases inn decision making such as.1.Overconfidence Bias2.Anchoring…

Q: Define the concept of going concern?

A: Going concern Concept: The basic principle of this concept is that business is assumed to exist for…

Q: explain why the author's assessment of the appropriateness of the going concern assumptions is so…

A: Going Concern Assumption- As per the going concern assumption business will continue its…

Q: Which came first, comparability or uniformity? Why? Please explain your position in detail. What…

A: The principles, procedures or rules that forms the basis for the preparation of the financial…

Q: Describe what is the sequence of steps that provide a framework for analyzing ethical issues?

A: Ethics implies the arrangement of rules that the association ought to follow. While in business,…

Q: Describe positive and negative externalities.

A: Externalities are benefits (positive effect) or costs (negative effects) on outsiders which…

Q: Differentiate between the techniques of vouching and verification.

A: The main objective of verification shows how assets and liabilities are valued properly. To…

Q: Which among the following is a form related attribute of good information? a. Relevance b.…

A: The attribute of good information are: Accuracy Completeness Consistency Uniqueness Timeliness

Q: What is the monetary threshold value, when a Statement of Advice (SOA) may be replaced by a Record…

A: Statement of advice is the way by which one can communicate his advice in relation to investment to…

Q: How can you tell the difference between planning and control decisions

A: The difference between planning and control decisions will be shown:

Q: What is a case study, what is the purpose of it, and why it is so important

A: Q3: why it is so important?Answer:Case studies hold significant importance for a variety of reasons.…

Q: sensitivity analysis

A: The sensitivity analysis represents the more reliable source of prediction. It helps the managers to…

Q: Describe moral hazard.

A: Moral hazard refers to circumstances in which an individual chooses to apply little or no effort, or…

Q: What Are the Relevant Facts?

A: Disclaimer: “Since you have asked multiple questions, we will solve the first question for you. If…

Q: What is the meaning behind Recognition Criteria? How does it help determine when an event should be…

A: Accounting ideas, usually referred to as accounting assumptions or accounting principles, are the…

Q: Explain the concept of contribution, its limiting factors and how it can effectively be used in…

A: INTRODUCTION: Decision-making is the process or act of determining anything using logic, intuition,…

Q: What is meant by each of the following potential characteristics of information: relevant, accurate,…

A:

Q: Describe about the Going concern assumption with example.

A: Accounting:   Accounting is the process of recording the financial transaction of the organization…

Q: Why is it important to "begin with the end in mind" when planning an assurance engagement

A: Assurance servicesto be  provided with an exhausting audit plan in place at the beginning.

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.