What is the uncertain or risky return on a security? Multiple choice question. It is the portion of the return on a security that depends on unknown information. It is the portion of the return on a security that is unaffected by any present or future information. It is the portion of the return on a security that depends on known information. It is the return on a security that is classified as risky by bond rating agencies.

What is the uncertain or risky return on a security? Multiple choice question. It is the portion of the return on a security that depends on unknown information. It is the portion of the return on a security that is unaffected by any present or future information. It is the portion of the return on a security that depends on known information. It is the return on a security that is classified as risky by bond rating agencies.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 8QTD

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What is the uncertain or risky return on a security? Multiple choice question. It is the portion of the return on a security that is unaffected by any present or future information. It is the return on a security that is classified as risky by bond rating agencies. It is the portion of the return on a security that depends on known information. It is the portion of the return on a security that depends on unknown information.
An increase in the riskiness of a particular security would NOT affect: Select one: A. The risk premium for that security B. The premium for expected inflation C. The total required return for the security D. Investors' willingness to buy the security
Market risk is portion of a security's stand-alone risk that cannot be eliminated through diversification. True False
Define the real risk-free rate (r*). What security canbe used as an estimate of r*? What is the nominalrisk-free rate (rRF)? What securities can be used asestimates of rRF?
The return an investor in a security receives is the Blank______ of that security to the company that issued it. Multiple choice question. cost return economic value added risk
The capital asset pricing model (CAPM) contends that there is systematic and unsystematic risk for an individual security. Which is the relevant risk variable and why is it relevant? Why is the other risk variable not relevant?
Which one of the following statements is correct concerning unsystematic risk? An investor is rewarded for assuming unsystematic risk. Beta measures the level of unsystematic risk inherent in an individual security. Eliminating unsystematic risk is the responsibility of the individual investor. Standard deviation is a measure of unsystematic risk. Unsystematic risk is rewarded when it exceeds the market level of unsystematic risk. оо O O
Risk and Return: Introduction Risk is an important concept affecting security prices and rates of return. Risk is the chance that some unfavorable event will occur, and there is a trade-off between risk and return. The higher an investment's risk, the-Select-the return required to induce investors to purchase the asset. This relationship between risk and return indicates that investors are risk ; investors dislike risk and require -Select- Vrates of return as an inducement to buy riskier securities. A represents the additional compensation investors require for bearing risk; it is the difference betweer the expected rate of return on a given risky asset and that on a less risky asset. An asset's risk can be considered in two ways: On a stand-alone basis and in a portfolio context. -Select- -Select-
The beta of a security measures Blank______. Multiple choice question. the responsiveness of the security's return to the return on the market as a whole the responsiveness of the security's total risk to the return on the market as a whole the correlation between the security and the risk-free rate the responsiveness of the security's unsystematic risk to the return on the market as a whole
The beta of a security measures Blank______. Multiple choice question. the responsiveness of the security's total risk to the return on the market as a whole the responsiveness of the security's unsystematic risk to the return on the market as a whole the responsiveness of the security's return to the return on the market as a whole the correlation between the security and the risk-free rate
What is the value of a security? What is the price of a security? How are security value and price linked with each other?
What type of risk is the risk that belongs to the market as a whole? Systematic risk Unsystematic risk (or nonsystematic risk) Total risk