Risk sharing is also called... Select one: asset discounting All the answers are correct liability transformation asset transformation asset selection

Q: Explain and give examples of the following risk Management techniques a. Retention b. Self insurance…

A: Note: I am supposed to provide the solution of first three subparts. Please repost the remaining…

Q: The best investment ____________________. Select one or more: a. maximizes reward b. maximizes…

A: The best investment depends on an individual's investment goals, risk tolerance, and financial…

Q: Explain the difference between systematic and unsystematic risk. Also explain why one of these types…

A: Financial markets are full of financial risks because these markets are related to the trade of…

Q: Which of the following risks cannot be hedged? A. Credit B. Liquidity C. Currency D. Duration

A: Some risk can be hedged using derivatives

Q: Risk can be subdivided into systematic and unsystematic risk. Describe each type of risk, the…

A: Systematic risk is the market risk or the undiversifiable risk of the asset which is unavoidable.…

Q: isk can be separated into undiversifiable risk and diversifiable risk. Discuss the difference…

A: In market there are many types of risk involved but broadly there are two types of risk…

Q: Explain risk arbitrage

A: It is a venture system to benefit from the narrowing of a hole of the exchanging cost of an…

Q: Which are the assumptions will be added as we discuss the various approaches to the valuation of the…

A: REIT stands for a real estate investment property. The investment is treated as investment in stocks…

Q: Asset allocation is performed to A) reduce the load that intermediaries charge maximize the earning…

A: Asset Allocation means the process of allocating money across different financial assets (such as…

Q: ite one example of the “pros-cons” on the use of Asset-Based Valuation and briefly explain

A: Asset-based valuation seems to be a type of business valuation primarily emphasizes on the worth of…

Q: Question Details Unsystematic risk is also known as unique risk. asset-specific risk. diversifiable…

A: The objective of the question is to identify the different names by which unsystematic risk is known…

Q: Hedging is matching the maturities of assets and liabilities to reduce risk.Hedging is matching the…

A: Given StatementHedging matches the maturities of assets and liabilities to reduce risk.What is…

Q: The transfer the risk from an insured individual to a group to minimize the possibility of losses is…

A: We take insurance coverage to reduce our risks. For example when we take health insurance coverage…

Q: Define the terms, or give short explanations.         -percentage return -price discovery…

A: Risk and return are two essential concepts in finance that are closely related to each other. In…

Q: Define within-firm risk

A: Within-firm risk: Corporate (within-firm) risk is a hazard identified with an individual business.…

Q: Define diversifiable risk

A: Diversifiable risk It is special to a given business or industry. Regularly known in the feeling of…

Q: 16. helps the investor to determine the suitable types of investments. A. Risk taker B. Risk adverse…

A: Risk of an investment asset is the fluctuation possible on the return. The riskier the asset, higher…

Q: Fair Value Accounting and Valuation in 3 Steps:   Asset or Liability Identification: The first…

A: Fair value is an amount that usually a person gets when he sells the asset or an amount paid to…

Q: weight

A: a) The expected rate of return for Brad is: Expected return = Σ (Return × Probability) = (-0.03 ×…

Q: The strategy that is used to determine the long-term policy asset weights in a portfolio is called O…

A: Investing in several asset classes helps investors manage risk and return. This technique is known…

Q: Define reinvestment rate risk

A: Reinvestment means investing without withdrawing the benefits (or) interest from the fund so that it…

Q: 10 The following are the Asset and Liabilities Management (ALM) strategies except:*         A.…

A: Asset and Liability Management (ALM) is the process of managing the balance between assets and…

Q: (a.) What is the underlying principle of valuation?(b). Why is it critical for us to learn the…

A:

Q: What role does the correlation what role does the correlation of two assets play in computation of…

A: The answer and the explanation can be seen below:

Q: Define fair value hedges.

A:

Q: When calculating a client’s net worth always use the sentiment value of each asset and the full, or…

A: Net worth refers to being calculated by deducting the liabilities from the value of assets which is…

Q: hat situational circumstances can the Asset-based valuation be

A: Valuation is the process of determining the fair market value of a company's assets or operations.…

Q: Asset pricing Models provide a logical basis for computing the risk premiums and determining the…

A: Capital Asset Pricing Model (CAPM) is tool used to calculate the systemic risk of a asset. CAPM…

Q: Market risk is referred to as: systematic risk. total risk. diversifiable risk. asset specific…

A: Market risk is the type of risk that affects the whole market. Market risk is not specific to a…

Q: Whenever you make an investment decision, you need to consider its impacts on the diversification of…

A: Investment decision and diversification go hand in hand. One should be careful while making an…

Q: Three main goals of Asset Liability Management are all of the following except: Group of answer…

A: Corporate finance is referred as the decision of the firm to take capital investments and other…

Q: Explain about the Hedging against fair value risk.

A: Financial instrument:   It is a monetary contract between two parties which acts as an evidence of…

Q: What can you tell just by looking at the above yield curve? Group of answer choices An expectation…

A: The yield curve is downward-sloping/flattening. A flattening curve indicates that in the short term…

Q: Explain how risk managers assess and manage consequential losses

A: Risk managers assess and manage consequential losses, also known as indirect losses, through a…

Q: A reasonable probability that an investment will produce a loss a. risk b. value c. specualtion…

A: There are several investment styles through which one can generate profits or build wealth.

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.