Which of the following risks can be eliminated through diversification? a. Systematic risk b. Idiosyncratic risk c. Market risk d. Non-diversifiable risk

Q: Clearly explain the difference between systematic risk and non-systematic risk and  discuss the…

A: Risk is the possibility of loss to a company due to unforeseen circumstances. Beta is the measure of…

Q: Explain the difference between unique risk and systematic risk

A: Answer

Q: Explain the difference between systematic and unsystematic risk. Also explain why one of these types…

A: Financial markets are full of financial risks because these markets are related to the trade of…

Q: How does the Broader Diversification Reduce Risk?

A: Portfolio is a pool of different investments/assets. Investors can categorize the risks in two…

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: Discuss how diversification reduces firm specific risk.

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

Q: What is risk? What is the difference between systematic and unsystematic risk?

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

Q: 1. In broad terms, why is some risk diversifiable? Why are some risks nondiversifiable? Does it…

A: Unsystematic risk is a risk that is distinctive to a particular firm or industry. Nonsystematic risk…

Q: What is security Market Line (SML)? How it explains risk-return relationship? Explain different…

A: What is security Market Line (SML)? The security market line can be understood as a tool for…

Q: This type of risk affects a large number of assets, each to a greater or lesser degree.…

A: The Systematic risk is the risk which can not to be reduced to zero. It is always present…

Q: What are quantitative measurements versus non-quantitative measurements with respect to risk?

A: Risk is used to describe the probability or uncertainty related to a future event with a favorable…

Q: How to compare other measures of risk with VaR(value at risk

A: VAR or Value at Risk is quantitative risk measurement in portfolio or firm this measures and also…

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: What types of information must be considered when it comes to risk and return?

A: Risk and return go hand in hand both are related to each other.There is direct correlation between…

Q: Define diversifiable risk

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

Q: Which of the following is not a category of risk response strategies? A. Acceptance. B.…

A: Risk mean the situations or circumstances which can lead to unfavourable or potential losses to the…

Q: quantitative risk analysis:

A: Quantitative risk analysis assess the risk associated with a particular monetary item.

Q: 1) The type of the risk that can be eliminated by diversification is called A) market risk. B)…

A: Risk is the possibility of happening of events that is against the estimation of investors. If the…

Q: Briefly define and give examples of each of the following components of total risk. Which type of…

A: Risk refers to the variability of returns. It is the possibility or the likelihood that the actual…

Q: What is the difference between systematic risk and unsystematic risk? Give an example of each.

A: Risk: The possibility that the actual outcome in a situation will differ from the expected outcome…

Q: In order to benefit from diversification, the returns on assets in a portfolio must: Answer a. Not…

A: a. Not be perfectly positively correlated   Explanation: Diversification is the process of…

Q: Define and explain the agency problem in terms of differences in ability to diversify risk by…

A: Agency problem occurs when there is a conflict of interest when manager is in dilemma to serve the…

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

A: Market risk is the type of risk that affects the whole market. Market risk is not specific to a…

Q: How are total risk, nondiversifiable risk, and diversifiable risk related? Why is nondiversifiable…

A: Total risk is measured by the standard deviation of returns; it has two elements non-diversifiable…

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: Explain if the operational risk is considered a risk or uncertainty? Why? If it is a risk, how can…

A: Operational Loss:   The risk involved in failures of Man, Machine, Material, and Methods during…

Q: identify the assumptions underlying the interest coverage ratio appropriate measure for analyzing…

A: The interest coverage ratio is a debt ratio and profitability ratio used only to calculate how…

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 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: 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: 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: Why is it important to be able to quantify risk?

A: Risk is the chance that an outcome of an investment's actual gain will differ from an expected…

Q: Discuss how diversification can enhance risk reduction?

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

Q: How important is risk to returns and what are the key elements that must be analyzed in this regard…

A: Risk: The Cambridge dictionary gives one of the meanings of the word "risk" as:  "to do something…

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: What does the term risk aversion mean, and howis risk aversion related to the expected return on…

A: Introduction: Risk can be characterized in terms of the uncertainty of future consequences resulting…

Q: What is hedging and how is it different from diversification? If a firm needs to manage its risk,…

A: A hedge is an investment that is made fully intent on diminishing the danger of unfriendly value…

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