ssment of stand-alone basis of asset, which of the following scenarios is correct? Using a bar graph, the returns of security HIS is more dispersed than security HER, therefore, security HER is risker. Security TIK is less risky than security TOK because the coefficient of variation of security TIK is significantly higher than TOK. The Sharpe ratio of security YIN is higher than that of security YANG. Therefore, security YANG is riskier Security ABC is riskier than Security DEF because security ABC has a highe
ssment of stand-alone basis of asset, which of the following scenarios is correct? Using a bar graph, the returns of security HIS is more dispersed than security HER, therefore, security HER is risker. Security TIK is less risky than security TOK because the coefficient of variation of security TIK is significantly higher than TOK. The Sharpe ratio of security YIN is higher than that of security YANG. Therefore, security YANG is riskier Security ABC is riskier than Security DEF because security ABC has a highe
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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
On the risk assessment of stand-alone basis of asset, which of the following scenarios is correct?
Using a bar graph, the returns of security HIS is more dispersed than security HER, therefore, security HER is risker.
Security TIK is less risky than security TOK because the coefficient of variation of security TIK is significantly higher than TOK.
The Sharpe ratio of security YIN is higher than that of security YANG. Therefore, security YANG is riskier
Security ABC is riskier than Security DEF because security ABC has a higher coefficient of variation
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