16. helps the investor to determine the suitable types of investments. A. Risk taker B. Risk adverse C. Risk tolerance D. Risk identification
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- Discuss the 3 categories of Risk Preference of an Investor, namely: •Risk Seeking •Risk Neutral •Risk Averse and how it affect risk tolerance of an investor.The desired rate of return on an investment should reflect the degree of risk involved. A. True B. FalseExplain the difference between (a) stand-alone risk and (b) risk in a portfolio context. How are they measured or calculated, and are they relevant to investors?
- Briefly define and give examples of each of the following components of total risk. Which type of risk matters, and why? Diversifiable (or firm-specific) risk Undiversifiable (or systematic) riskWhen risk grows while an investor's return remains constant, that investor is said to be a. Risk-Neutral b. Risk-Averse c. Risk-seeking d. Risk-Awarewhich of the following headings best describes and measures gearing : a- financial position (risk) b- liqudity c- proftibility d-perforamance / efficincy
- Differentiate among the three basic risk preferences: risk-indifferent, risk-averse, and risk-seeking. Which of these attitudes toward risk best describes most investors? How do you define yourself when it comes to dealing with risk?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 riskRisk can be subdivided into systematic and unsystematic risk. Describe each type of risk, the related compensation for bearing that risk, and give some examples of each type.