what is the key deference between Value - at - Risk ( VaR ) and volatility ? More specifically, what is the advantage of using VaR as opposed to volatility ?

Q: lue (NPV) anc g decisions? Pl

A: Introduction : Net present value  can be understood as the value which depicts the actual worth…

Q: Initial Cost Installation Cost Increase in NWC Salvage Value Units sold Depreciation Rate Years…

A: Net Present Value = Sum of discounted cash Inflows - Initial Investment

Q: Under what circumstances is stand-alone and market risk most relevant?

A: Stand-alone risk is the risk associated with a single investment or project, and it is typically…

Q: _______ is a measure of risk while _______ is a measure of risk and liquidity.

A: Capital budgeting is the process of distributing the resources(finance) of the organization in…

Q: Miller orr Model describes different levels such as____. a. Upper Limit b. Lower limit c. Return…

A: Cash is one of the important assets for the firm, and it affects the overall liquidity of the firm.…

Q: The US investor now learns that the two-factor arbitrage pricing theory (APT) model describes the US…

A: As per two factor arbitrage pricing theory (APT model)

Q: 6. Assume that both portfolios A and B are well diversified, that E(rA) = 12%, and E(rB) = 9%. If…

A: Formulas:

Q: Explain the drawbacks of IRR over MIRR with example?

A: Capital budgeting is part of investment decisions. Business firms consider capital budgeting in…

Q: Explain the logic behind creating “spreads” with options.

A: The question is based on the concept of financial and investment strategy to either maximize return…

Q: Explain the difference between a linear risk and a nonlinear risk.

A: Linear risk is an enterprise's risk, based on the traditional economic system of "take-up-dispose."…

Q: 1. Which entry strategy has the least risk and why?

A: When a company is looking to enter a new market especially a new foreign market (i.e. a market in…

Q: What are the advantages and disadvantages of  LIFO?

A: Last-in-First-Out: In Last-in-First Out method, the costs of last purchased items are considered as…

Q: LIFO instead of FIFO

A: Inventory valuation plays a key role in any company. However, the choice of the valuation method…

Q: what is return. Define risk and explain how it is assessed

A: Definition

Q: Consider the following utility function: u = 400 (1 + 1)−1. xy a. Is this utility function…

A: Solution-

Q: What is the maximum value that a call can take? Why? Explain which option (i.e. put or call)…

A: Options are of 2 types:1) Call Option2) Put Option

Q: How can we calculate the Rate-of-Return with Excel?

A: The question is based on the concept of calculation of rate of return (ROR), (ROR) is percentage…

Q: an efficient portolio ...... 1) minimise return for a given level of risk 2) minimise risk for a…

A: The chances or probability for investment including portfolio and real assets that they will lose…

Q: What is the difference between YTD and YoY return? Provide an example

A: In the question they have asked regarding YTD and YOY differences between them so they will be…

Q: What is the purpose of NPV analysis? Be sure to discuss the concepts of risk and return in your

A: Net present value NPV is used quite extensively in capital budgeting decisions whether to accept or…

Q: In a binomial tree model of a put option, why is the value of the upper node always 0 and in a call…

A: The binomial tree model is a simplified method used in option pricing, where the price of the…

Q: What is the difference between hedging risk and spreading risk?

A: Hedging risk is a strategy used to reduce the risk of adverse price movements in a financial asset…

Q: Draw an indifference curve for a risk-neutral investor providing utility level .05.

A: The indifference curve of a risk-neutral investor at the utility level of 0.05 is as follows:

Q: Explain the idea of forecasting the VaR. Which methods one can use to predict μ and why is it…

A: Value-at-Risk (VaR) is a widely used risk management tool that quantifies the potential loss in…

Q: 12.13 Suppose that each of two investments has a 4% chance of a loss of $10 million, a 2% chance of…

A: Value at risk is the amount that is under risk for the portfolio.

Q: What does it mean to be at the optimal capitalstructure? What is optimized? What is maximizedand…

A: Introduction: Capital structure is nothing but the debt and securities that are included in the…

Q: How is VaR used to limit risk?

A: Value at Risk (VaR) a statistical tool which measures and quantifies financial risk a firm or…

Q: What is MIRR - Modified Internal Rtae of Return?  Please provide example.

A: One of the pitfall method of conventional IRR is the fact that it assumes cash flows are reinvested…

Q: Estimating the SML Equation 13.2 ;=17 = Yo + Y1 * b; i = 1,... 100 CAPM is valid, then yo and y,…

A: This question is based on the CAPM Regression equation which shows the relationship between the…

Q: 1. Project Development time (hrs.) Initial investment Calendar/email Expense report Tracking program…

A: The question is related to Capital Budgeting. The Net Present Value will be calculated with the help…

Q: Define conditional value at risk (CVaR)

A: The question is based on the concept of conditional value at risk , it is a risk assessment process.…

Q: What is the difference between smart beta ETFS and index ETFS?

A: Smart beta exchange traded funds (ETFS) is a systematic approach which gives the advantage of active…

Q: Define dollar-value LIFO (DVL) and explain its advantages.

A: Dollar-value LIFO is an accounting method used for inventory that follows the last-in-first-out…

Q: Define value at risk (VaR)

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…