35- Based on the information in the table, which stock has the greatest systematic risk? Stock Standard Deviation Beta W 37% 1.20 X 35% 1.50 Y 30% 0.95 Z 45% 1.30 Group of answer choices W because it has the largest standard deviation. X because it has the largest beta coefficient. Z because it has a high beta and the largest standard deviation. Y because it has the greatest diversifiable risk.
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
35-
Based on the information in the table, which stock has the greatest systematic risk?
|
Stock |
Standard Deviation |
Beta |
|
W |
37% |
1.20 |
|
X |
35% |
1.50 |
|
Y |
30% |
0.95 |
|
Z |
45% |
1.30 |
Group of answer choices
W because it has the largest standard deviation.
X because it has the largest beta coefficient.
Z because it has a high beta and the largest standard deviation.
Y because it has the greatest diversifiable risk.
36-
According to the
37-
A beta less than One implies that the stock has less unsystematic risk than the overall market.
38-
Diversification can substantially reduce the variability of returns with an equivalent reduction in expected returns.
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