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Is there any justification for an investor to invest in assets with a negative beta?
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- You are a risk-averse investor. Would you therefore invest in financial assets that have a high or a low beta (b) coefficient? How high or low the beta coefficient should be in this case?Even if behavioral biases do not affect equilibrium asset prices, why might it still be important for investors to be aware of them?How can an investor eliminate Unsystematic Risk?
- Beta and CAPM Is it possible that a risky asset could have a beta of zero? Explain. Based on the CAPM, what is the expected return on such an asset? Is it possible that a risky asset could have a negative beta? What does the CAPM predict about the expected return on such an asset? Can you give an explanation for your answer?What does a failed net-investment test indicate?What are the real risks of an adverse financial outcome, especially in the short run?
- 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?any risk attached to a financial asset should not be considered when making an investment decision because all financial assets are risky. true or false?Explore the implications of short-selling and the inclusion of a risk-free asset.