Discuss about systematic and unsystematic risk.

Q: What determines the acceptable level of Detection Risk?

A: Detection Risk:   It is a chance that an auditor will fail to identify any material misstatement…

Q: Explain the difference between unique risk and systematic risk

A: Answer

Q: Explain the types of risk?

A: Introduction: There is a risk involved in any company decision, and in personal life decisions. In…

Q: Define stand-alone risk

A: Stand-alone risk:This refers to the risk linked with a single aspect of a firm or any particular…

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: Define Risk aversion

A: A risk averse saver is an investor who favors inferior returns with recognized risks somewhat than…

Q: Hedging is used to deal with three areas of risk exposure. Which are those risks? Name them.

A: Following are the three areas of risk exposure: Transaction risk: Transaction risk alludes to the…

Q: What is risk? What is the difference between systematic and unsystematic risk?

A: Risk: Risk can be defined as upcoming uncertainty about variation from anticipated earnings or…

Q: Explain what is risk decompositon

A: Risk is referred as the future uncertainty with reference to the deviation from an expected earnings…

Q: Define . Slope of SML and its relationship to risk aversion

A: Introduction: SML refers to security market line, it is a line indicating the relationship between…

Q: What are quantitative measurements versus non-quantitative measurements with respect to risk?

A: Risk is used to describe the probability or uncertainty related to a future event with a favorable…

Q: How to compare other measures of risk with VaR(value at risk

A: VAR or Value at Risk is quantitative risk measurement in portfolio or firm this measures and also…

Q: What is takaful and how it can be used as a risk mitigation tool and write down the names of types…

A: Takaful may be a style of monotheism insurance whereby members contribute cash into a pool system to…

Q: Define Risk in general

A: In finance, risk is defined as the level of vulnerability that potentially creates financial loss…

Q: What types of information must be considered when it comes to risk and return?

A: Risk and return go hand in hand both are related to each other.There is direct correlation between…

Q: What is event risk?

A: Event risk is the likelihood of a sudden event adversely affecting an organization, industry, or…

Q: Define diversifiable risk

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

Q: What is the criticism for using SMB and HML as risk factors?

A: The Fama and French Three-Factor Model (or Fama French Model for short) is an asset pricing model…

Q: quantitative risk analysis:

A: Quantitative risk analysis assess the risk associated with a particular monetary item.

Q: Describe Inherent Risk.

A: Definition:   Audit Planning: Audit planning is the first step in the auditing process. The auditor…

Q: What happens when Control Risk is below the maximum level?

A:

Q: What is the difference between systematic risk and unsystematic risk? Give an example of each.

A: Risk: The possibility that the actual outcome in a situation will differ from the expected outcome…

Q: Explain political risk

A: Political risks are important to be considered because they have an impact on the profitability…

Q: What three techniques are used to assess stand-alone risk?

A: Stand-alone risk: Stand-alone risk is the risk related with the anticipated project cash flow. The…

Q: What should occur when a low level of Detection Risk is acceptable?

A: Detection risk is the risk that procedures performed to reduce audit risk will not detect a material…

Q: Calculate the risk neutral probability

A: Risk neutral probability = (er*Δt - d)/(u-d) r is risk free rate. Δt is time period between each…

Q: Distinguish between: Systematic risk and Unsystematic risk

A: The risks faced by the company arises from both micro as well as macro levels. The risk arising out…

Q: real life examples of systematic and unsystematic risk

A: Systematic risk - Systematic risk refers to that risk that is inherent to a market segment or the…

Q: What does a project’s stand-alone risk reflect?

A: Stand alone risks are risks that are associated with a particular asset or a project. Companies when…

Q: Discuss the Beta of  as measure of systematic risk.

A: In finance systematic risk refers to that risk which is inherent to the entire market. As the risk…

Q: What is shared risk? Use an example to explain the shared risk happen and who will involved?

A: Risk means the uncertainty of happening of an event. When the risk is higher than the uncertainty of…

Q: Provide a comprehensive definition of risk

A: Risk is described in financial terms as the probability that the actual gains of an event or…

Q: _________ factors are conditions and other variables that in their present, or absence, as the case…

A: Less start with basic understanding. For auditing being made, audit needs to make plan for…

Q: Explain risk aversion

A: Introduction: Risk can be characterized in terms of the uncertainty of future consequences resulting…

Q: Define risky event

A: Risk is the variability in expected return and the actual return. When the actual return is more…

Q: Why is it important to be able to quantify risk?

A: Risk is the chance that an outcome of an investment's actual gain will differ from an expected…

Q: Define a risk event.

A: Risk Event:  When an event can cause losses to the company's stakeholders and investors due to…

Q: Explain how NPV varies with risks. Show your argument using formulate for cases with different…

A: NPV or Net present value is the difference between the present value of cash inflows and cash…

Q: Give an example of a risk that is clearly a diversifiable risk and one that is clearly a…

A: It refers to risk that can be eliminated through diversification. Those risks are firm specific,…

Q: Differentiate between systematic and unsystematic risks.

A: Risk refers to the chances or probability of losses due to uncertain situations or conditions. In…

Q: Define risk of material misstatement.

A: Material misstatement represents the statement presented in the financial statement which is…

Q: One of the characteristics of an insurable risk is that a risk needs to be determinable and…

A: An insurable risk class is a group of people or businesses with similar characteristics that are…

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.