Risk management unit 5

Regarding risk levels, financial managers should: A. evaluate investor's desire for risk. B. avoid higher risk projects because they destroy value. C. pursue higher risk projects because they increase value. D. focus primarily on market fluctuations. Note: Provide short answer for this account question

This type of risk affects a large number of assets, each to a greater or lesser degree.   Group of answer choices systematic risk unsystematic risk idiosynchratic risk principle of diversification

Systematic risk is defined as: a risk that specifically affects an asset or small group of assets. any risk that affects a large number of assets. any risk that has a huge impact on the return of a security. the random component of return. None of the above.

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Which one of the following statements is correct concerning unsystematic risk? An investor is rewarded for assuming unsystematic risk. Beta measures the level of unsystematic risk inherent in an individual security. Eliminating unsystematic risk is the responsibility of the individual investor. Standard deviation is a measure of unsystematic risk. Unsystematic risk is rewarded when it exceeds the market level of unsystematic risk. оо O O

What type of risk can NOT be eliminated through diversification?      Systematic risk     Unsystematic risk (or nonsystematic risk)     Total risk

Hedging is a risk management strategy that is used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies.   REQUIRED: Discuss the importance of hedging to the financial risk manager Are there any downside to hedging?

accounting answer need

Question Details Unsystematic risk is also known as unique risk. asset-specific risk. diversifiable risk. all of the above

When conducting a technical risk assessent, which of the following is true? project structure is never an issue for technical risk high structured projects are riskier than projects than are low structured low structured projects are riskier than projects that are highly structured O high structured projects are equally risky as projects that are low structured

According to the CAPM, which of the following risks is irrelevant?   Select one: a. Unsystematic risk   b. Systematic risk   c. All risks are always relevant   d. Market risk

The systematic risk principle states that the expected return on a risky asset depends only on which one of the following? Unsystematic risk Market risk Diversifiable risk

Risk is the potential for an investment to generate more than one return. A security that will produce only one known return is referred to as a risk-free asset, as there is no potential for deviation from the known expected outcome. Investments that have the chance of producing more than one possible outcome are called risky assets. Risk, or potential variability in an investment’s possible returns, occurs when there is uncertainty about an investment’s future outcome, such as the return expected to be generated by the investment and realized by an investor. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?   Stand-alone risk   Portfolio risk     Generally, investors would prefer to invest in assets that have: a high level of risk and low expected returns.   a low level of risk and high expected returns.

Because systematic risks are market-wide effects, they are sometimes called Blank______. Multiple choice question. business-specific risks residual risks diversifiable risks market risks

Market risk is referred to as:   systematic risk. total risk. diversifiable risk. asset specific risk. 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. Buying common stock is riskier than buying a U.S Treasury bill. state reason in 'other'   true False Other: Which one of the following statements is an example of unsystematic risk?   The number of vehicles sold by a major manufacturer was less than anticipated. GDP was 0.5 percent lower than expected. The inflation rate increased by 5 percent. The value of the dollar declined against…

A borrower who takes out a loan usually has better information about the potential returns and risks of the investment projects he plans to undertake than the lender does. This inequality of information is called O a. adverse selection. b. moral hazard. C. asymmetric information. O d. noncollateralized risk.

Another name for systematic risk is: Unique risk None of these are correct Diversifiable risk Firm-specific riski

How can investors and market participants navigate the presence of anomalies and the potential for abnormal returns while managing associated risks effectively?  Are there specific strategies or approaches that you find particularly effective in this content  ?

The capital asset pricing model (CAPM) contends that there is systematic and unsystematic risk for an individual security. Which is the relevant risk variable and why is it relevant? Why is the other risk variable not relevant?