According to the CAPM, the main factor that explains the performance of an asset is given by the... Asset-specific idiosyncratic risk Systemic Risk of the asset, expressed through its BETA against the Broad Market Absolute Risk of the asset expressed by its Volatility (Standard Deviation of the Returns) None of the above

Q: hich of the following would not be acceptable as a measure of basic investment risk? a)Expected…

A: Risk is always there when you invest in stock returns and risk is volatility of returns and change…

Q: assets that you add it to ii. The amount of a portfolio's risk that is diversified away depends on…

A: Step 1 Unsystematic risk refers to a general risk to the company or industry. Informal risk is also…

Q: Portfolio which consists of perfectly positive correlated assets having no effect of A. negativity B…

A: A portfolio is built to accomplish a particular investment objective, whether or not or not it's…

Q: Which of the following statements regarding non-systematic risk, systematic risk and total risk…

A: Systematic risk is the risk derived from the market and which is measured by the beta of the stock…

Q: Portfolio standard deviation is negatively associated with the covariance among the assets in the…

A: The portfolio standard deviation is the financial measure which computes the investment risk and…

Q: Question Details Unsystematic risk is also known as unique risk. asset-specific risk. diversifiable…

A: The objective of the question is to identify the different names by which unsystematic risk is known…

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.

Q: Which of the following least describes the fundamental weighting of indices?   There may be a…

A: The fundamental weighted index's  is calculated by estimating the economic scale of each company…

Q: The contribution of an individual asset to the riskiness of a fully diversified portfolio depends…

A: A portfolio is made up of two or more than two stocks. A well-diversified portfolio is that…

Q: If the assumptions underlying the CAPM hold, then an implication from the model is that: A)…

A: The CAPM shows the relationship between the Systematic risk and the return expected by the…

Q: According to the CAPM, the expected return of an asset that has just diversifiable risk and no…

A: As per CAPM,  Expected Return = Rf + ( Beta * (Rm -Rf)) Rf = Risk free rate of return Rm = Market…

Q: A "risk-premium" is the difference between ___________________________ . A) the variance of a…

A: Solution:- Capital Asset Pricing Model (CAPM) is the equity model to determine the expected rate of…

Q: Briefly define and give examples of each of the following components of total risk. Which type of…

A: Risk refers to the variability of returns. It is the possibility or the likelihood that the actual…

Q: According to the CAPM, which of the following risks is irrelevant?   Select one: a. Unsystematic…

A: CAPM stands for Capital Asset Pricing Model. This theoretical model shows the relationship between…

Q: isk that affects at most a small num a. total risk b. portfolio risk c. unsystematic risk D

A: Risk refers to the form of uncertainties linked to a business proposal, investment, or even in the…

Q: The CAPM states that expected returns depend on an asset’s loading on market risk.

A: CAPM stands for capital asset pricing model. This model was developed by William. F. Sharpe. As per…

Q: A change in the risk premium, E(Rm) - Rf, results in... a) A change in the vertical intercept of…

A: concept. The security market line (SML)  gives the market’s expected return at different levels of…

Q: Determine whether each of the statements (a)–(c) is True or False.   A) Underestimation of the…

A: Capital Asset Pricing Model (CAPM) is used to determine the cost of equity of a firm or project…

Q: Another name for systematic risk is: Unique risk None of these are correct Diversifiable risk…

A: Systematic risks are related to risk of overall market risk and these are related to whole market…

Q: Someone who is risk neutral A. does not care about an asset's risk B. places a value on an asset…

A: The term "risk neutral" refers to an individual's mindset when considering investment possibilities.…

Q: Examine (i) the relation between market returns and investor sentiment, and (ii) the relation…

A: the relationship between the market returns investor sentiment and conditional volatility is stated…

Q: Which statement best describes the concept of risk? A) Under a situation of risk, future outcomes…

A: When you invest money than there is uncertainty related and not sure how much you would earn or how…

Q: At a minimum, which of the following would you need to know to estimate the amount of additional…

A: A risk-free commodity is one that has a guaranteed future return and almost no chance of declining…

Q: Stock prices and stand-alone risk Risk is the potential for an investment to generate more than one…

A: Portfolio risk refers to the overall risk associated with a portfolio of investments rather than…