The difference between systematic risk and unsystematic risk. Introduction: Systematic risk is essential for the complete market or segment. It is otherwise called market risk or undiversifiable risk that has an overall impact. This risk is unavoidable and not predictable. Here, hedging and appropriate strategy of asset allocation works out. While, mitigation with diversification is not possible. Systematic risk states how one investment supports to the total aggregate risk of business’s financial funding. Unsystematic risk is otherwise called the diversifiable, residual, non-systematic or specific risk. The proportion of a corporation’s total or aggregate risk which can be reduced through diversified asset portfolio.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 12, Problem 1CQ

Summary Introduction

To determine: The difference between systematic risk and unsystematic risk.

Introduction:

Systematic risk is essential for the complete market or segment. It is otherwise called market risk or undiversifiable risk that has an overall impact. This risk is unavoidable and not predictable. Here, hedging and appropriate strategy of asset allocation works out. While, mitigation with diversification is not possible.

Systematic risk states how one investment supports to the total aggregate risk of business’s financial funding.

Unsystematic risk is otherwise called the diversifiable, residual, non-systematic or specific risk. The proportion of a corporation’s total or aggregate risk which can be reduced through diversified asset portfolio.

Expert Solution & Answer

Explanation of Solution

The following are the differences between systematic risk and unsystematic risk:

Systematic risks are type of risks that cannot be differentiated through the construction of a portfolio.
Normally, systematic risk factors influence a substantial number of firms in the market, though those elements will not really influence all organizations similarly.
Unsystematic risk can be diversified or reduced through portfolio development.
Unsystematic risk issues are particular to the firm or industry.
While, some components impact the profitability of an industry/firm; it does not in another firm/industry. However, it can be applicable for different firms in same industry.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Consider the following gasoline sales time series. If needed, round your answers to two decimal digits. Week Sales (1,000s of gallons) 1 17 2 21 3 19 4 23 5 18 6 16 7 20 8 18 9 22 10 20 11 15 12 22 (a) Show the exponential smoothing forecasts using α = 0.1, and α = 0.2. ExponentialSmoothing Week α = 0.1 α = 0.2 13 (b) Applying the MSE measure of forecast accuracy, would you prefer a smoothing constant of α = 0.1 or α = 0.2 for the gasoline sales time series? An smoothing constant provides a more accurate forecast, with an overall MSE of . (c) Are the results the same if you apply MAE as the measure of accuracy? An smoothing constant provides a more accurate forecast, with an overall MAE of . (d) What are the results if MAPE is used? An smoothing constant provides a more accurate forecast, with an overall MAPE of .

After many sunset viewings at SUNY Brockport, Amanda dreams of owning a waterfront home on Lake Ontario. She finds her perfect house listed at $425,000. Leveraging the negotiation skills she developed at school, she persuades the seller to drop the price to $405,000. What would be her annual payment if she opts for a 30-year mortgage from Five Star Bank with an interest rate of 14.95% and no down payment? a- $25,938 b- $26,196 c- $24,500 d- $27,000

Imagine that the SUNY Brockport Student Government Association (SGA) is considering investing in sustainable campus improvements. These improvements include installing solar panels, updating campus lighting to energy-efficient LEDs, and implementing a rainwater collection system for irrigation. The total initial investment required for these projects is $100,000. The projects are expected to generate savings (effectively, the cash inflows in this scenario) of $30,000 in the first year, $40,000 in the second year, $50,000 in the third year, and $60,000 in the fourth year due to reduced energy and maintenance costs. SUNY Brockport’s discount rate is 8%. What is the NPV of the sustainable campus improvements? (rounded) a- $70,213b- $48,729c- $45,865d- $62,040

Answer 2

Question

Chapter 12, Problem 1CQ

Summary Introduction

To determine: The difference between systematic risk and unsystematic risk.

Introduction:

Systematic risk is essential for the complete market or segment. It is otherwise called market risk or undiversifiable risk that has an overall impact. This risk is unavoidable and not predictable. Here, hedging and appropriate strategy of asset allocation works out. While, mitigation with diversification is not possible.

Systematic risk states how one investment supports to the total aggregate risk of business’s financial funding.

Unsystematic risk is otherwise called the diversifiable, residual, non-systematic or specific risk. The proportion of a corporation’s total or aggregate risk which can be reduced through diversified asset portfolio.

Expert Solution & Answer

Explanation of Solution

The following are the differences between systematic risk and unsystematic risk:

Systematic risks are type of risks that cannot be differentiated through the construction of a portfolio.
Normally, systematic risk factors influence a substantial number of firms in the market, though those elements will not really influence all organizations similarly.
Unsystematic risk can be diversified or reduced through portfolio development.
Unsystematic risk issues are particular to the firm or industry.
While, some components impact the profitability of an industry/firm; it does not in another firm/industry. However, it can be applicable for different firms in same industry.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 12, Problem 1CQ

Summary Introduction

To determine: The difference between systematic risk and unsystematic risk.

Introduction:

Systematic risk is essential for the complete market or segment. It is otherwise called market risk or undiversifiable risk that has an overall impact. This risk is unavoidable and not predictable. Here, hedging and appropriate strategy of asset allocation works out. While, mitigation with diversification is not possible.

Systematic risk states how one investment supports to the total aggregate risk of business’s financial funding.

Unsystematic risk is otherwise called the diversifiable, residual, non-systematic or specific risk. The proportion of a corporation’s total or aggregate risk which can be reduced through diversified asset portfolio.

Expert Solution & Answer

Explanation of Solution

The following are the differences between systematic risk and unsystematic risk:

Systematic risks are type of risks that cannot be differentiated through the construction of a portfolio.
Normally, systematic risk factors influence a substantial number of firms in the market, though those elements will not really influence all organizations similarly.
Unsystematic risk can be diversified or reduced through portfolio development.
Unsystematic risk issues are particular to the firm or industry.
While, some components impact the profitability of an industry/firm; it does not in another firm/industry. However, it can be applicable for different firms in same industry.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 1CQ

Summary Introduction

To determine: The difference between systematic risk and unsystematic risk.

Introduction:

Systematic risk is essential for the complete market or segment. It is otherwise called market risk or undiversifiable risk that has an overall impact. This risk is unavoidable and not predictable. Here, hedging and appropriate strategy of asset allocation works out. While, mitigation with diversification is not possible.

Systematic risk states how one investment supports to the total aggregate risk of business’s financial funding.

Unsystematic risk is otherwise called the diversifiable, residual, non-systematic or specific risk. The proportion of a corporation’s total or aggregate risk which can be reduced through diversified asset portfolio.

Expert Solution & Answer

Explanation of Solution

The following are the differences between systematic risk and unsystematic risk:

Systematic risks are type of risks that cannot be differentiated through the construction of a portfolio.
Normally, systematic risk factors influence a substantial number of firms in the market, though those elements will not really influence all organizations similarly.
Unsystematic risk can be diversified or reduced through portfolio development.
Unsystematic risk issues are particular to the firm or industry.
While, some components impact the profitability of an industry/firm; it does not in another firm/industry. However, it can be applicable for different firms in same industry.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1CQ

Summary Introduction

To determine: The difference between systematic risk and unsystematic risk.

Introduction:

Systematic risk is essential for the complete market or segment. It is otherwise called market risk or undiversifiable risk that has an overall impact. This risk is unavoidable and not predictable. Here, hedging and appropriate strategy of asset allocation works out. While, mitigation with diversification is not possible.

Systematic risk states how one investment supports to the total aggregate risk of business’s financial funding.

Unsystematic risk is otherwise called the diversifiable, residual, non-systematic or specific risk. The proportion of a corporation’s total or aggregate risk which can be reduced through diversified asset portfolio.

Expert Solution & Answer

Explanation of Solution

The following are the differences between systematic risk and unsystematic risk:

Systematic risks are type of risks that cannot be differentiated through the construction of a portfolio.
Normally, systematic risk factors influence a substantial number of firms in the market, though those elements will not really influence all organizations similarly.
Unsystematic risk can be diversified or reduced through portfolio development.
Unsystematic risk issues are particular to the firm or industry.
While, some components impact the profitability of an industry/firm; it does not in another firm/industry. However, it can be applicable for different firms in same industry.

Answer 6

Chapter 12, Problem 1CQ

Summary Introduction

To determine: The difference between systematic risk and unsystematic risk.

Introduction:

Systematic risk is essential for the complete market or segment. It is otherwise called market risk or undiversifiable risk that has an overall impact. This risk is unavoidable and not predictable. Here, hedging and appropriate strategy of asset allocation works out. While, mitigation with diversification is not possible.

Systematic risk states how one investment supports to the total aggregate risk of business’s financial funding.

Unsystematic risk is otherwise called the diversifiable, residual, non-systematic or specific risk. The proportion of a corporation’s total or aggregate risk which can be reduced through diversified asset portfolio.

Expert Solution & Answer

Explanation of Solution

The following are the differences between systematic risk and unsystematic risk:

Systematic risks are type of risks that cannot be differentiated through the construction of a portfolio.
Normally, systematic risk factors influence a substantial number of firms in the market, though those elements will not really influence all organizations similarly.
Unsystematic risk can be diversified or reduced through portfolio development.
Unsystematic risk issues are particular to the firm or industry.
While, some components impact the profitability of an industry/firm; it does not in another firm/industry. However, it can be applicable for different firms in same industry.

Answer 7

Chapter 12, Problem 1CQ

Summary Introduction

To determine: The difference between systematic risk and unsystematic risk.

Introduction:

Systematic risk is essential for the complete market or segment. It is otherwise called market risk or undiversifiable risk that has an overall impact. This risk is unavoidable and not predictable. Here, hedging and appropriate strategy of asset allocation works out. While, mitigation with diversification is not possible.

Systematic risk states how one investment supports to the total aggregate risk of business’s financial funding.

Unsystematic risk is otherwise called the diversifiable, residual, non-systematic or specific risk. The proportion of a corporation’s total or aggregate risk which can be reduced through diversified asset portfolio.

Answer 8

Expert Solution & Answer

Explanation of Solution

The following are the differences between systematic risk and unsystematic risk:

Systematic risks are type of risks that cannot be differentiated through the construction of a portfolio.
Normally, systematic risk factors influence a substantial number of firms in the market, though those elements will not really influence all organizations similarly.
Unsystematic risk can be diversified or reduced through portfolio development.
Unsystematic risk issues are particular to the firm or industry.
While, some components impact the profitability of an industry/firm; it does not in another firm/industry. However, it can be applicable for different firms in same industry.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 12 - Prob. 1CQ Ch. 12 - Prob. 2CQ Ch. 12 - Prob. 3CQ Ch. 12 - Prob. 4CQ Ch. 12 - Market Model versus APT What are the differences...Ch. 12 - APT In contrast to the CAPM, the APT does not...Ch. 12 - CAPM versus APT What is the relationship between...Ch. 12 - Prob. 8CQ Ch. 12 - Data Mining What is data mining? Why might it...Ch. 12 - Prob. 10CQ

Explanation of Solution

Want to see more full solutions like this?

Chapter 12 Solutions