If two returns are positively related to each other, they will have a ________, and if they are negatively related to each other, the ______________. Group of answer choices positive covariance, covariance will be negative positive covariance, standard deviation will be negative negative covariance, covariance will be zero negative covariance, covariance will be positive
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.
- If two returns are positively related to each other, they will have a ________, and if they are negatively related to each other, the ______________.
Group of answer choices
positive covariance, covariance will be negative
positive covariance, standard deviation will be negative
negative covariance, covariance will be zero
negative covariance, covariance will be positive
- This type of risk affects a large number of assets, each to a greater or lesser degree.
Group of answer choices
systematic risk
unsystematic risk
idiosynchratic risk
principle of diversification
- True/False. The
Dividend Discount Model can be applied to firms that do not pay dividends.
Group of answer choices
True
False
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