Investor is considering using semi-variance instead of variance. State the argument in favour of using semi-variance instead of variance. Under what circumstance would the use of semi-variance not make any difference? a) b)

Investor is considering using semi-variance instead of variance. State the argument in favour of using semi-variance instead of variance. Under what circumstance would the use of semi-variance not make any difference? a) b)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 19Q: When might a favorable variance not be a good outcome?

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Concept explainers

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.

Question

Investor is considering using semi-variance instead of variance.
State the argument in favour of using semi-variance instead of variance.
Under what circumstance would the use of semi-variance not make any
difference?
a)
b)

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