With respect to an investor's utility function expressed as: U = E(r) –Ao², which of the following ilues for the measure for risk aversion has the least amount of risk aversion? A. -4. В. О. С. 4.
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- Provide a descriptive formula for each of the following (e.g., Total risk =?+?): a. Total risk= b. Discount rate= c. Adjusted NPV=QUESTION 2 For which type of risk do you get rewarded with a higher expected return? a. Firm-specific risk Ob. Total risk C. Diversifiable risk d. Unknown е. Systematic riskQ .1 What is the Sharpe measure of:i. Portfolio A?ii. Portfolio C?iii. Portfolio E? Q.2 What is the Treynor measure of:i. Portfolio A?ii. Portfolio C?iii. Portfolio E?
- 21. Which of the following statements is most accurate? If the covariance of returns between two assets is 0.0023, then: A. the assets' risk is near zero. B. the asset returns are unrelated. abia C. the asset returns have a positive relationship.The expected value, standard deviation of returns, and coefficient o below.) \table[[Asset A],[Possible Outcomes,Probability,Returns (%)_______ is a measure of risk while _______ is a measure of risk and liquidity. NPV; IRR IRR; NPV PI; payback Payback; PI
- The the expected return, the the risk. O a. lower; higher O b. higher,lower O c. higher; higher more stable; higherExpected return and standard deviation a. What is the expected return of asset J?Rm-R is read as: O a. The return offered by the market over and above the risk-free rate O b. Market risk premium- Oc. Excess return on the market C. Od. All options are correct
- Which of the following statements is true for compensation of risk? a. Higher the risk, lower is the return b. Lower the risk, higher is the return c. Higher the risk, higher is the return d. Higher the risk, zero is the returnAssume an investor with a utility of the form U= E -0.5As2 . For the risk aversion values of A=1 The utility of investing in EEM is A. lower than the utility of investing in IWM B. higher than the utility of investing in IWM C. equal than the utility of investing in IWM D. none of the aboveAccording to our textbook, risk is a: C. Unexpected loss D. All of the above B. Expected loss A. Trade-off with return