Generally speaking, a growth stock has duration than a value stock. Multiple Choice More, longer interest rate risk and

Q: The wider the dispersion of returns on a stock, the:

A: Investors evaluate the portfolio or security on the basis of risk profile. The risk profile can be…

Q: Illustrate the impact of changes in the dividend, the growth rate, the expected return on the…

A: The value of a stock is determined by several factors, including the dividend, the growth rate, the…

Q: A price weighted index places more weight on stocks with a higher price, whilst a value weighted…

A: Weighted price index is reflection of whole market so it must truly represent the whole market.

Q: Could a more optimal portfolio, that is, one containing some other combination of stocks that would…

A: The question is based on the concept of optimal portfolio, an optimal portfolio is a theoretical…

Q: Describe in your own words the characteristics of growth and value stocks.  Which type of stock is…

A: Stocks, usually referred to as shares or equities, are certificates of ownership in publicly traded…

Q: How does higher expected growth affect a stock’s value?

A: Stock value is referred to as the shares of the corporation, which used to appear to trade at the…

Q: What are the two components of most stocks’ expected total return?

A: Expected total return refers to the full return of an investment over a certain period of time.

Q: he best answer with respect to a stock's "alpha"? (In a CAPM world) Group of answer choices The…

A: Alpha of the stock or portfolio is risk adjusted performance given by the portfolio and how much…

Q: Which of the following statements is correct? (explain your answer) Shorter term securities have…

A: Reinvestment risk is risk of investment of coupon payment .

Q: What does the meaning of maximum and minimum price in the stock performance graph? how to know which…

A: Succinctly summarized, a stock chart is a graph that illustrates the price of a stock over a certain…

Q: If there is a stock which is substantially overvalued, where it should plot relatively to the SML?…

A: SML or Security Market Line:- It is an graphical representation of CAPM model. SML graph is being…

Q: Beta is measure of a stock's _____________________ risk. Select all that apply. A) systematic…

A: There are two types of risk are present: 1. Systematic risk 2. Unsystematic risk.

Q: The greater the volatility of the underlying stock, the higher; lower lower; higher higher; higher…

A: The greater the volatility of the underlying stock, the higher the premiums for both call and put…

Q: Briefly discuss the limitations of Constant Growth Model in the valuation of stocks.

A: The constant growth model, often known as the Gordon Growth Model, is a method of stock valuation.…

Q: Is stock with Increasing dividend yield and decreasing market price per share a good stock to…

A: Dividend yield is the amount of money given to shareholders for owning a share of a company's stock…

Q: Differentiate between the terms expected rate of return, required rate of return, and historical…

A: The expected rate of return is the normal rate of return that the speculation can anticipate. By and…

Q: How duration and convexity can help investors better manage their fixed-income portfolios. Give…

A: Convexity is referred to as the risk management tool, which helps in measuring as well as managing…

Q: What impact does each of the followingparameters have on the value of a call option?(5) Variability…

A: A call option provides certain rights to an individual regarding purchasing any stock at a strike…

Q: Why are the returns of sustainable stocks and traditional stocks different?

A: Stock returns are the returns that are generated in the stock market for investing in a stock.

Q: What happens when investors rate of return is greater than YTM and coupon rates?

A: The coupon rate of a bond is the annual rate of interest it pays, whereas the yield is the rate of…

Q: Which are the most efficient combination of securities that provides investors with maximum…

A: The efficient frontier is a set of optimal portfolios that provide the greatest expected return for…

Q: Under which of the following circumstances would you want to buy a stock? Select one: a. The HPR is…

A: Stock also known as share or equity represent a part of ownership in a publicly traded company. When…

Q: If you compare two stocks which have identical firm-specific risk. However, one of these options has…

A: Beta is a numerical measurement that measures how a stock reacts to movements in the general stock…

Q: what are two methods to calculate the expected rate of return for stocks?

A: The required rate of return (RRR) is the lowest rate of return an investor will accept for holding…

Q: If a stock has a higher volatility, would your broker would want to set the maintenance margin…

A: Maintenance margin is minimum margin amount that we need to maintain as an investor after the…

Q: Can an investor eliminate market risk from a portfolio of common stocks?

A: Beta is a systemic risk of this kind. The risk integral to the business or segment as a whole is…

Q: Assume the price, S, of a non-dividend paying stock follows geometric Brownian motion with drift r…

A: A call option gives the right to the buyer to buy a stock at an exercise price X. An option is a…

Q: Explain how to find the value of a nonconstant growth stock

A: Introduction: Non-constant models of growth presume that the valuation can fluctuate over time. This…

Q: Explain realized rate of return on stock

A: Realized Rate of Return on stock gives you the percentage return on holding the stock for a certain…

Q: risk premium: (a) The risk premium indicates the amount of compensation investors require for…

A: Market risk premium or the risk premium is the extra returns that is required by the invester for…

Q: What is relationship between the market risk of a stock and it's expected return?

A: Expected return is directly related to the market risk . Market risk is represented by beta. Higher…

Q: Which of the following best describe a speculative stock? high risk, low volatility, start-ups high…

A: Speculative stocks are those where the price of stock changes too frequently and are quite volatile.

Q: In a ________ index, changes in the value of the stock with the greatest market value will have the…

A: The value weighted index is a type of index which is considering the effect of weight of a…

Q: Describe two different ways one can short equity market volatility

A: An equity market Volatility is the rate at which the price of a stock increases or decreases over a…

Q: How GARCH (generalized ARCH model) model is applied to Stock Price Volatility?

A: GARCH model is one of the models that is usually used by the financial analysts. The financial…

Q: Which of the following statements is CORRECT? Multiple Choice Company-specific risk can be…

A: The unsystematic risk is the company specific risk, the systematic risk is the vulnerability related…

Q: For the cost of equity (stock) is it better to use the current US Treasury bill rate or a…

A: For a debt commitment to be called entirely risk-free, investors must have perfect assurance that…

Q: In a binomial tree created to value an option on a stock, what is the expected return on the option?…

A: The binomial tree model is a commonly used method in finance for valuing options and other financial…

Q: Describe, in words, how to use the variable growth rate technique to value a stock

A: The variable growth rate is the rate of growth which is not constant and various companies who are…

Q: Which of the following techniques is used to value stock options?   a. Black-Scholes method b.…

A: black scholes method is used to value options

Q: In efficient markets, the rate of return on a stock should be: A. always greater than the risk-free…

A: Efficient market is the market in which stock prices refelcts all the information available.

Q: What is Stock Beta and Describe a Stock with little risk and Stock with high risk? Define Beta and…

A: Stock Beta: Beta is a measure of a stock's sensitivity to market movements. It quantifies the…

Q: Explain the difference between expected rate of return, required rate of return, and historical rate…

A: Return Return is also referred to as the money lost or made over a specific period of time. It can…

Q: To estimate the required rate of return on a stock we can use the Capital Asset Pricing Model (CAPM)…

A: The required rate of return on a stock can be defined as a rate of return which an investor would…