Microsoft Word - Week 5__W

EXERCISE 1Indicate whether each of the following statements is true or false. Support your answerswith the relevant explanations.1) The higher the systematic risk of a company’s stock, the higher the value of itsbeta. The higher the beta, the higher the return required by the investors.(Explain your reasoning.)

Q1 .In an investment market , understanding the concept of undervalued and overvalued stock is very important . hence , a prudent investor must have good knowledge about beta, market rate of return and risk free rate of return a) Being an investor , critically analyse the conditions of undervalud and overvalued stock

Q1 .In an investment market , understanding the concept of undervalued and overvalued stock is very important . hence , a prudent investor must have good knowledge about beta, market rate of return and risk free rate of return  a) Being an investor , critically analyse the conditions of undervalud and overvalued stock b) Give a graphical example to present the positioning of - systematic risk - risk free rate of return  - mareket rate of return - risk premium

Q1 .In an investment market , understanding the concept of undervalued and overvalued stock is very important . hence , a prudent investor must have good knowledge about beta, market rate of return and risk free rate of return b) Give a graphical example to present the positioning of- systematic risk- risk free rate of return - mareket rate of return- risk premium

Please answer both QUESTION 7 According to the capital asset pricing model (CAPM), fairly priced securities should have A. A non-zero alpha. в.A fair return based on the level of systematic risk. C. A fair return based on the level of unsystematic risk. D.A beta of 1. QUESTION 8 Diversification can increase fair return. True False

A stock's required rate of return The part of a stock's risk that can be eliminated is know as _______________risk   The portion of the stock's risk that cannot be eliminated is called ___________ risk Answer 2 Question 5 Market risk is also referred to as ________________ risk Answer 3 Question 5 The ______ coefficient measures a stock's relative volatility as compared with a stock's market index.

G 2

Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items.  Question 2Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph

D4

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

When a firm invests in money market instruments, it is taking _______ and should expect __________.   Question 17 options:   1)  high risk, high returns   2)  high risk, low returns   3)  low risk, low returns   4)  low risk, high returns

I need all the answers just tell me if it true or false please

1

Answer quickly After making an investment, an investor learns that Intel stock is now undervalued. This is an illustration of a. Market Interruption  b. Portfolio Management  c. Security Analysis  d. Asset Allocation

Explain why the risk premium of a stock does not depend on its diversifiable risk.       Question content area bottom Part 1 ​(Select the best choice​ below.)     A. Investors​ don't care about diversifiable risk and so​ don't hold any.   B. Investors care about diversifiable​ risk, but hedge their positions so they​ don't demand a risk premium.   C. Although investors must hold diversifiable​ risk, they​ don't care about​ it, so there is no risk premium.   D. Investors can remove diversifiable risk from their portfolio by diversifying. They therefore do not demand a risk premium for it.

Pdr

7.1 Question 1 Which of the following statements about risk-averse investors is most accurate? A risk averse investor: A seeks out the investment with minimum risk, while return is not a major consideration. B will take additional investment risk if sufficiently compensated for this risk. C avoids participating in global equity markets. 7.2 Question 2 Evidence of risk aversion is best illustrated by a risk-return relationship that is: A negative. B neutral. C positive. 7.3 Question 3 With respect to an investor's utility function expressed as U(F) = E\F] – }¬V« (F), which of the following values for the measure of risk aversion has the least amount of risk aversion? A -4. B 0. C 4.