According to Goetzmann and Ibbotson, when it comes to measuring the equity risk premium, what is the most problematic variable, and why is this variable so problematic?
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- If we are speaking about the CAPM model and undiversifiable risks. Then what is meant by returns which are not captured by the market return.1. Define the components of holding period return. Can any of these components be negative? 2. How do you understand an investment risk and what statistic tools can be used to measure it?When can investors treat beta as a relevant risk measure and when can they treat beta as only a systematic risk measure? Explain the two cases clearly and carefully (Explain using a graph and make sure you label the axes)
- Which one of the following statements is correct? Group of answer choices The lower the average return, the greater the risk premium. The greater the volatility of returns, the greater the risk premium. The lower the volatility of returns, the greater the risk premium. The risk premium is not affected by the volatility of returns. The risk premium is unrelated to the average rate of return.What is idiosyncratic risk? How does it differ from market risk?Why does standalone risk differ from portfolio risk? Explain and give examples! Relates your answer with CAPM!
- How can an investor eliminate Unsystematic Risk?Explain if the operational risk is considered a risk or uncertainty? Why? If it is a risk, how can we quantify it? Please provide an example. In Investment, why do you need to quantify every risk?Examine (i) the relation between market returns and investor sentiment, and (ii) the relation between market returns and conditional volatility. Discuss potential limitations of your work.
- What is the expected return on a portfolio? How can the expected return on a portfolio be manipulated to minimize the risk on that portfolio? Justify your answer.What assumption about risk-adjusted techniques for measuring performance poses a potential problem? A. Portfolio risk is constant over time B. Returns are normally distributed C. Mean reversion D. None of the options are correct.Market potential is an example of an economic risk measure. O True O False