Investor is considering using semi-variance instead of variance. State the argument in favour of using semi-variance instead of variance. Under what circumstance would the use of semi-variance not make any difference? a) b)

Q: Why will the standard deviation not be a good measure of risk when returns are negatively skewed

A: The standard deviation of returns is a measure of the volatility of market returns and determines…

Q: hich of the following would not be acceptable as a measure of basic investment risk? a)Expected…

A: Risk is always there when you invest in stock returns and risk is volatility of returns and change…

Q: Using a wrong formula for CAPM is a __  (select one) a. Erronous model risk b. Market data…

A: Introduction : In simple word, the capital asset pricing model (CAPM) is the valuation model used to…

Q: Why are unfavorable variances recorded by using debitentries and favorable variances recorded by…

A:

Q: Which of the following is the correct statement about the inflation figure that is included in the…

A: Cost of capital is the required return necessary to make a capital budgeting project

Q: In some cases, a favourable variance can be as bad or worse as an unfavourable variance.

A: Favorable variances (FV) refers to generating more amount of revenue or income from the source than…

Q: Which of the following is FALSE regarding variances? O A favorable variance, when it occurred, are…

A: The method of costing used to determine deviations is referred to as standard costing. The standard…

Q: How do you decide if the variance is favorable or unfavorable?

A: The discrepancy between budgeted and actual amounts is known as a "variance" in the accounting…

Q: be saved. Assume that every asset has the same expected return and variance. Furthermore, all assets…

A: Variance:It is the measure of deviation value of expected return that varies from the mean position.…

Q: Beyond meaning good or bad for business, can you please explain the mechanics of favorable and…

A: The discrepancy between budgeted and actual figures is referred to as variance in accounting.…

Q: Are the unfavorable variances always bad? Are the favorable variances always good? Why

A: Variance analysis is an important aspect of accounting. In variance analysis we compare the actual…

Q: In a regression analysis, the variable that is being predicted is the a. Intervening variable O b.…

A: The variable that is attempted to clarify or anticipate is known as the the response variable,…

Q: ional investors will never choose a portfolio low the minimum variance point. Also show at this…

A: Efficient set  is set of portfolio which gives maximum return on given level of risk. no other…

Q: What would cause an unfavorable price variance? When the actual usage is greater than the standard…

A: The price variance is calculated by the formula: Where,

Q: Assume that every asset has the same expected return and variance. Furthermore, all assets have the…

A: Variance is a statistical tool used to measure the extent to which the returns are spread from the…

Q: Explain favourable variance.

A: Definition:   Variance analysis: Variance analysis is the process of evaluating the differences…

Q: Calculate the following and determine if variances are favorable

A: Compute the total standard material cost.

Q: An analysis of what happens to the estimate of net present value when only one input variable is…

A: Net Present Value: It is the present worth of future cash flows and the initial cost of the project.…

Q: I can use the regression beta as my estimate of beta in a valuation. True or false

A: Beta refers to the measurement of the volatility of stock related to the market as a whole. When…

Q: You are given the the information below on a mutual fund. What is the arithmetic average? Year 1…

A: A compound average return on stock each year is known as the 1-year return of that stock.

Q: When we use Excel to perform a regression analysis, the independent variable data must be contiguous…

A: The question states how data should be placed while conducting a regression analysis in excel. We…

Q: What is the difference between the possible returns and the expected return?

A:

Q: Explain the difference between a favorable and an unfavorable variance.

A: Variance: The term variance is used under standard costing system. Variance is actually the…

Q: xplain the shape of the Markowitz (that is, mean-variance) efficient frontier, specifically what…

A: Markowitz (that is, mean-variance) efficient frontier-It is also known as mean - variance model and…

Q: When the total direct labor cost variance is unfavorable, the direct labor rate variance will (must)…

A: Honor Code: Since you have asked multiple questions, we will solve the first question for you. If…

Q: “The direction of a variance (favorable or unfavorable) is irrelevant in decisions regarding…

A: “The direction of a variance (favorable or unfavorable) is irrelevant in decisions regarding is…

Q: Define variance

A: Variance in statistics is the calculation of the distribution in an information source between the…

Q: Note: Use the minus sign to indicate negative values (when the budgeted amount is greater than the…

A: In the variance analysis, the actual cost incurred, and the standard cost are compared with each…

Q: Distinguish between a favorable variance and an unfavorable variance.

A: Favorable Variance: Favorable variance is the variation in the actual and planned output which is…

Q: Write down two possible causes for each variance.

A: Variance refers to the differs between the budgeted and actual. It may be favourable and…

Q: Differentiate between variance analysis and sensitivity analysis

A: Managers of small businesses can benefit from both variance and sensitivity analyses when trying to…

Q: What is favorable variance? Give three examples?

A: Favorable Variance: Favorable variance is the variation in the actual and planned output which is…

Q: 1. A two-year bond with $1,000 face-value and 10% coupon rate is sold for $1,000 today (Year 1).  If…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Why do some investors prefer to use Lower Partial Standard Deviations (LPSD) as compared to the…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: 3. Some people suggest that the direct labor rate variance is never controllable. Do you agree or…

A: Labor rate Variance:   The amount obtained when actual cost is deducted from budgeted cost is known…

Q: You deposit $1,000 into an account every six months to help with your down payment savings for a…

A: Compound Interest = P(1 + r)nP = PrincipleR = Rate of Interest N = Period

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.