INVESTMENTS (LOOSELEAF) W/CONNECT
11th Edition
ISBN: 9781260465945
Author: Bodie
Publisher: MCG
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Chapter 7, Problem 6CP
Summary Introduction
To select: The measure of risk for a security held in a diversified portfolio.
Introduction: The prospects of loss in particular security due to normal or abnormal fluctuations in the price is known as risk. Standard deviation is the measure of risk.
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Students have asked these similar questions
The measure of risk for a security held in a diversified portfolio is:
Specific risk.
Standard deviation of returns.
Reinvestment risk.
Covariance.
The measure of risk for a security held in a diversified portfolio is:a. Specific risk.b. Standard deviation of returns.c. Reinvestment risk.d. Covariance.
Standard deviation of portfolio returns is a measure of ___________.
Group of answer choices
total risk
systematic risk
market risk
firm-specific risk
unsystematic risk
Chapter 7 Solutions
INVESTMENTS (LOOSELEAF) W/CONNECT
Ch. 7 - Prob. 1PSCh. 7 - Prob. 2PSCh. 7 - Prob. 3PSCh. 7 - Prob. 4PSCh. 7 - Prob. 5PSCh. 7 - Prob. 6PSCh. 7 - Prob. 7PSCh. 7 - Prob. 8PSCh. 7 - Prob. 9PSCh. 7 - Prob. 10PS
Ch. 7 - Prob. 11PSCh. 7 - Prob. 12PSCh. 7 - Prob. 13PSCh. 7 - Prob. 14PSCh. 7 - Prob. 15PSCh. 7 - Prob. 16PSCh. 7 - Prob. 17PSCh. 7 - Prob. 18PSCh. 7 - Prob. 19PSCh. 7 - Prob. 20PSCh. 7 - Prob. 21PSCh. 7 - Prob. 22PSCh. 7 - Prob. 23PSCh. 7 - Prob. 1CPCh. 7 - Prob. 2CPCh. 7 - Prob. 3CPCh. 7 - Prob. 4CPCh. 7 - Prob. 5CPCh. 7 - Prob. 6CPCh. 7 - Prob. 7CPCh. 7 - Prob. 8CPCh. 7 - Prob. 9CPCh. 7 - Prob. 10CPCh. 7 - Prob. 11CPCh. 7 - Prob. 12CPCh. 7 - Prob. 13CP
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- What is a characteristic line? How is this line used to estimate a stocks beta coefficient? Write out and explain the formula that relates total risk, market risk, and diversifiable risk.arrow_forwardWhich of the following factors is most likely to affect the level of systematic risk in a portfolio? The type of industries represented in the portfolio The number of securities in the portfolio Macroeconomic conditions The geographic location of the securities in the portfolioarrow_forwardThe contribution of an individual asset to the riskiness of a fully diversified portfolio depends primarily on which of the following? The covariance of the asset's return with the return of the rest of the portfolio The variance of the asset's return The covariance of the asset's return with the return on the riskless asset The skewness of the asset's returnarrow_forward
- 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?arrow_forwardTrue or false The risk or variability of a well-diversified portfolio mostly reflects the contributions to risk from the standard deviations of the stocks within that portfolioarrow_forwardThe risk of the portfolio depends not only on the individual risks of the assets but also on the ________ between the asset returns.arrow_forward
- The standard deviation of a portfolio Group of answer choices -is not a weighted average of the standard deviations of the individual securities held in that portfolio. -cannot be less than the weighted average of the standard deviations of the individual securities held in that portfolio. -measures the amount of diversifiable risk inherent in the portfolio. -is a measure of that portfolio's systematic risk. -serves as the basis for computing the appropriate risk premium for that portfolio..arrow_forwardWhich of the following measures reflects the excess return earned on a portfolio per unit of its systematic risk a. Treynor’s measure b. Sharpe’s measure c. Jensen’s measure d. Total measurearrow_forwardThe security market line depicts:a. A security’s expected return as a function of its systematic risk.b. The market portfolio as the optimal portfolio of risky securities.c. The relationship between a security’s return and the return on an index.d. The complete portfolio as a combination of the market portfolio and the risk-free asset.arrow_forward
- Indicate why you agree with justifications to the following statements: “As a percentage of the total risk, the unsystematic risk of a diversified portfolio is greater than that of an individual asset.”arrow_forward: What is risk and how is it measured? How is risk measured in a portfolio compared to risk in a stand-alone stock? How do you measure the relevant risk in a portfolio?arrow_forwardThe security market line depicts: a. Expected return as a function of systematic risk (indicated by beta) b. The market portfolio as the optimal portfolio of risky assets c. The relationship between a security’s return and the return on the index d. Portfolio combinations of the market portfolio and the risk-free asset e. Expected return as a function of volatilityarrow_forward
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