INVESTMENTS-CONNECT PLUS ACCESS
11th Edition
ISBN: 2810022611546
Author: Bodie
Publisher: MCG
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Question
Chapter 8, Problem 5CP
Summary Introduction
To Select: The find the option that states the exact difference between the risk associations of beta and standard deviation.
Introduction: Beta and Standard Deviation are two different types of risk measures.
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Check out a sample textbook solutionStudents have asked these similar questions
Standard deviation and beta both measure risk, but they are different in that
beta measures both systematic and unsystematic risk.
beta measures only systematic risk while standard deviation is a measure of total risk.
beta measures only unsystematic risk while standard deviation is a measure of total risk.
beta measures both systematic and unsystematic risk while standard deviation measures only systematic risk.
beta measures total risk while standard deviation measures only nonsystematic risk.
Market risk is referred to as:
systematic risk.
total risk.
diversifiable risk.
asset specific risk.
Standard deviation and beta both measure risk, but they are different in that
beta measures both systematic and unsystematic risk.
beta measures only systematic risk while standard deviation is a measure of total risk.
beta measures only unsystematic risk while standard deviation is a measure of total risk.
beta measures both systematic and unsystematic risk while standard deviation measures only systematic risk.
beta measures total risk while standard deviation measures only nonsystematic risk.
Buying common stock is riskier than buying a U.S Treasury bill. state reason in 'other'
true
False
Other:
Which one of the following statements is an example of unsystematic risk?
The number of vehicles sold by a major manufacturer was less than anticipated.
GDP was 0.5 percent lower than expected.
The inflation rate increased by 5 percent.
The value of the dollar declined against…
Standard deviation can be viewed as a measure of systematic and unsystematic risk combined
True
False
Chapter 8 Solutions
INVESTMENTS-CONNECT PLUS ACCESS
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Similar questions
- Explain the difference between systematic and unsystematic risk. Also explain why one of these types of risks is rewarded with a risk premium while the other type is not.arrow_forwardCAPM accounts for a. Unsystematic risk b. Systematic risk c. Both Systematic and Unsystematic risk d. Unique riskarrow_forwardWhat are quantitative measurements versus non-quantitative measurements with respect to risk?arrow_forward
- According to the CAPM, which of the following risks is irrelevant? Select one: a. Unsystematic risk b. Systematic risk c. All risks are always relevant d. Market riskarrow_forwardWhich of the following is not a category of risk response strategies? A. Acceptance. B. Reduction. C. Avoidance. D. Compliance.arrow_forwardRisk can be separated into undiversifiable risk and diversifiable risk. Discuss the differencebetween the two risksarrow_forward
- Which of the following is not recognized as a measurement of risk? median range best case/worst case standard deviation coefficient of variationarrow_forwardDistinguish between: Systematic risk and Unsystematic riskarrow_forwardRisks that are insurable because their probabilities can be calculated precisely enough for the risk to be quantified. a) Speculative b) Explicit c) Measured d) Purearrow_forward
- Finaancial risk is not directly associate with.. a) ROE b) EBIT c) EPS d) EATarrow_forwardAnother name for systematic risk is: Unique risk None of these are correct Diversifiable risk Firm-specific riskiarrow_forwardWhich of the following statements is true? Select one: Total risk = market risk + unique risk. Total risk = systematic risk + undiversifiable risk. Total risk = unique risk + diversifiable risk Market risk = undiversifiable risk + systematic risk. Total risk = diversifiable risk + firm-specific risk.arrow_forward
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