11. hich of the following statements about hedging is (are) true? I. Hedging is a form of risk transfer. II. Hedging is used to address the risk of unfavorable price fluctuations. A. I only B. Il only C. both I and || D. neither I nor II Answer:

Q: 11- Which of the following statement is true for compensation of risk? a. Lower the risk, higher is…

A:

Q: None

A: To determine the price today of claims that pay S(T)Q(T)​ and S(T)Q(T)​, we will use the given…

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A: If the market are efficient that means all investors have sufficient information and knowldege than…

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A: If we're using the index model (or single-index model) to determine the covariance between two…

Q: 19. The slope of the SML is determined by the value of market risk premium. a. True b. False

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: 31. If a change in the investment environment leads to an increase in the Risk-Free Rate while the…

A: Market risk premium is the difference between the Return on the Market Portfolio(Rm) and the…

Q: 9.  When we use the WACC to assess a project, we assume that the ________ ratio does not change.…

A: WACC is used to understand the feasibility of a project and is concerned with debt, equity…

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A: If the expected rate of return for the market is not much greater than the risk-free rate of return,…

Q: 15. Standard deviation can be used to measure a) Risk of an investment, b) Return of an investment,…

A: The correct answer is: a) Risk of an investment.

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A: Financial institutions A financial institution refers to the company that is involved in the dealing…

Q: Which of the following is NOT true? In risk-neutral valuation the risk-free rate is used to discount…

A: Risk-neutral valuation produces a valuation that is correct in all situations not just those where…

Q: age of over-the-counter products such as swaps or forwards contracts, relative to exchange-traded…

A: Exchanged traded products are traded on stock exchanges where as over the counter products are…

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A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

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A: Financial instruments are the assets that can be traded. Most of the financial instruments provide…

Q: 14. Using fundamental analysis, if intrinsic value is greater than the market price per share…

A: If intrinsic value is greater than market price per share, then it means shares are undervalued.

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A: Capital asset pricing model is the risk adjusted model for finding out risk adjusted return after…

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A: “Since you have posted multiple questions, we will solve first three subparts for you. To get…

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A: Since you have posted the question with multiple sub-parts, we will solve the three first three…

Q: Which of the following is/are an examples of unsystematic risk of a stock   O a Political risk…

A: Operating Risk

Q: 17. Liquidity risk is a chance that an investment cannot be easily liquidated: True False

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A: The Asset Pricing Program investigates the variables that affect the costs and yields of financial…

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A: Beta is an important concept used in finance. It has been explained below.

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Q: then these assets vary in

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Q: the assets' risk is the asset returns a

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Q: The advantage of over-the-counter products such as swaps or forwards contracts,relative to…

A: The question is multiple choice question. Required  Choose the Correct Option.

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Q: which one is correct please confirm? Q2: "An increase in the volatility of the underlying asset,…

A: if we applied in options the higher the given shift over then the given time period, the higher the…

Q: The Fama-French 3-factor model is a multi-factor models that includes two additional risk factors…

A: The Fama and French model takes into account three variables: the ratio of a company's book value to…

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A: Stock price is the price that the investor can pay for the stock in the financial market. Intrinsic…

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Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.