What key assumption underlies the pure expectations theory?

Q: Risk management focuses on what?

A: Organizations assess the stakeholder’s responses as risks or opportunities which would affect the…

Q: What is Scenario Analysis?

A: Scenario analysis is an important step in the financial modelling. This is used to show the possible…

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: What exactly are ESOPs? What are some of its benefits and drawbacks?

A: Introduction: ESOP: Employee stock ownership plan is retirement plans for employees of the company…

Q: What is Gordon model?

A: Intrinsic value of a stock is based on the internal information of an organization. That is, market…

Q: eristics?

A: Step 1   Risk is defined as an occurrence that harms financial performance and/or reputation as a…

Q: What is the going concern assumption?

A: Going concern Assumption: On the basis of Going concern assumption Financial statements are…

Q: What assumptions underlie the EOQ model?

A: The model that helps in calculating the optimal amount of quantity needs to be purchase for…

Q: What is the Black Scholes Model?

A: Black Scholes Model is an option pricing model.

Q: Explain pure expectations theory

A: It estimates the future interest without considering the maturity risk. According to the expectation…

Q: Explain risk of overreliance and risk of underreliance in brief.

A: Due to material misstatement, an auditor probably render  an unqualified opinion on the state of…

Q: Explain HPRs and Inflation?

A: Answer: Holding period returns (HPRs): Holding period return (HPR) is one of the investment…

Q: What Does RiskReally Mean?

A: Risk: Risk can be defined as upcoming uncertainty about variation from anticipated earnings or…

Q: What does maturity matching mean, and what is the logic behindthis policy?

A: Maturity matching It is a financing strategy for working capital. Under this strategy, financing of…

Q: What is indifference curve?

A: Indifference curve: It is a diagram indicating a mix of two items that give equivalent fulfillment…

Q: Define the term predictive value.

A: Predictive value refers to the fact that quality financial information can be used to base…

Q: Briefly explain the assumptions of CAPM

A: Capital Asset Pricing Model (CAPM) is a measure used for determining the price of risky assets.…

Q: How do you explain or interpret predictive model information?

A: Meaning- Predictive Model As the name suggest, where with the help of historical figures or even…

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: Define the term Trade-Off between Risk and Reward?

A: Risk-Reward trade off refers to an investment principle which indicates higher the risk, higher is…

Q: What is the difference between the possible returns and the expected return?

A:

Q: Explain risk-neutral valuation

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

Q: What is the Internal-Rate-of-Return Criterion?

A: Internal rate of return (IRR): The internal rate of return (IRR) is a measure utilized in capital…

Q: Conduct Breusch-Godfrey test the hypothesis stated?

A:

Q: What are the key assumptions of the CAPM?

A: Introduction: The CAPM is an equilibrium model that stipulates the relationship between necessary…

Q: What assumptions are inherent in the EOQ model as presentedhere?

A: Economic order quantity (EOQ): Economic ordering quantity (EOQ) is the perfect order quantity a…

Q: Is funding a type of risk?

A: Funding means providing the funds to the party and charging interest rates from them. Firms need…

Q: Define Covariance?

A: Portfolio management is a dynamic decision making process about investment. It is a continuous…

Q: What is the concept behind the EOQ model?

A: Economic Order Quantity (EOQ) Model: It is a method of inventory costing that aims to identify the…

Q: averse

A: Risk is involved in everything. Risks will be there right from the task that we do till the…

Q: Explain Expectations Theory?

A: Expectations theory attempts to predict what short-term interest rates will be in the future based…

Q: What is the difference between positive and negative predictive value?

A: Positive predictive value is the probability that subjects with a positive screening test truly have…

Q: The expectations gap is

A: The Answer :

Q: What is Agency theory ?

A: Agency theory Agency theory explains the connection between the principal and agent. concerned…

Q: What risk does Beta measure?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk 1. Systematic risk : It is…

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: what is the risk-free rate (rf)?

A: Risk free rate is also called as treasury bill rate. This treasury bill rates are free from default…

Q: What is value at risk, VaR?

A: Value at Risk (VaR) is a financial metric that estimates the risk of an investment. More…

Q: t is objective?...

A: Objective vs subjective trading: Most traders follow either an essentially objective or subjective…

Q: Explain Prepayment Assumptions?

A: Prepayment model : In simple words, A prepayment model is employed in banking to forecast the amount…

Q: For any given distribution of outcomes and probabilities, describe how preferences over risk affect…

A: An outcome is a potential result of an experiment in probability theory. The likelihood of an event…