FIN320_6-2 Journal_AliciaWilkinson

Exploring Finance: The Security Market Line and Inflation Changes Security Market Line: Inflation Changes Conceptual Overview: Explore how inflation changes the security market line. The Security Market Line defines the required rate of return for a security to be worth buying or holding. The line, depicted in blue in the graph, is the sum of the risk-free return (rf in the slider) and a risk premium determined by the market-risk premium (RPM) multiplied by the security's beta coefficient for risk. Drag the slider below the graph to change the amount of the risk-free return. These changes reflect changes in inflation. Drag left or right on the graph to move the cursor to evaluate securities with different beta coefficients. In this graph, the market-risk premium is fixed at 5%. r = r_{RF} + RP_M * beta = 6\% + 5\% * 1 = 6\% + 5.00\% = 11.00\%r=r​RF​​+RP​M​​∗beta=6%+5%∗1=6%+5.00%=11.00% 1.  If the risk-free return were 4.0% and a security's beta coefficient were 2.0, what would be…

In a CAPM world, what do you need to know in order to estimate an asset's expected return? Group of answer choices The risk free rate, the market risk premium, and the asset's standard deviation The risk free rate, the market risk premium, and the asset's beta The corporate bond rate, the expected return on the S&P 500 and the asset's Beta Market sentiment, historical stock returns and the risk free rate

Match the words with the term.   Question 14 options: 12345 venture capital 12345 quality of security to satisfy investors 12345 long term debt financing 12345 uncertainty 12345 share versus debt financing   1. business risk 2. instrument risk 3. risk capital 4. bond 5. financial risk

Which of the following investment has the lowest risks and lowest returns! EE savings bonds. Money market savings accounts. Real estate. Exchange-traded funds.

The risk premium for an investment: Answer a. Is negative for U.S. Treasury Securities b. Is zero (0) for risk-averse investors c. Increases with risk d. Is a fixed amount added to the risk-free return, regardless of the level of risk

Q1)VaR can be defined as the minimal loss of a financial position during a given time period for a given probability. true or fslse  Q2 Stocks tend to move together if they are affected by ________. common economic events events unrelated to the economy idiosyncratic shocks unsystematic risk Q3)Beta can be viewed as a measure of systematic risk TRUE OR FASE

Subject  :- Finance

From the perspective of the treasury professional, which of the following is a type of market risk but is NOT a type of financial risk?   Commodity price risk Equity price risk Interest rate risk Foreign exchange (FX) risk

Question 5 a) How do financial institutions help individuals to diversify their portfolio risks? Which financial institution is best able to achieve this goal? b) Suppose the real risk-free rate in 2022 was 3.50% and inflation for the year was 3.0 %. If investors had expected the same inflation rate as that actually realised, what was the exact nominal interest rate? c) Please define the risk-adjusted return on capital (RAROC).

1. What are some examples of financial instruments that can be used for hedging interest rate risks, and how would they work?

answer pls

SITIcation. 24. In the capital asset pricing model, the beta coefficient is a measure of index of the degree of movement of an asset's return in response to a change in risk and an A) diversifiable; the prime rate B) nondiversifiable; the Treasury bill rate C) diversifiable; the bond index rate D) nondiversifiable; the market return 5. Loading document MacBook Air DII DD 80 F7 F8 F9 F2 F3 F4 F5 F6 呂

Which asset below is generally the most suitable benchmark measure of the risk-free return? Treasury bills Small stocks Long-term government bonds Non-investment grade bonds Common stocks

Based upon risk, which of the following financial assets is likely to have the highest required rate of return? Select one: A. A corporate bond B. A U.S. Treasury bill C. A bank certificate of deposit D. A share of common stock