risk-adjusted discount rate has

Q: Which broadly ranks credit default risk from lowest to highest?     Conforming, CRA, subprime…

A: Default risk is the risk that a lender takes on in the chance that a borrower will be unable to make…

Q: Among the factors considered in the quantitative models of default risk: a. Business cycle b.…

A: Business cycle is defined as an economic cycle that is linked with fluctuation of the GDP in its…

Q: Explain the difference between systematic and unsystematic risk. Also explain why one of these types…

A: Financial markets are full of financial risks because these markets are related to the trade of…

Q: Investors require a _____ return as compensation for taking ____ risk. A) higher, margin B)…

A: Risk is the possibility that the actual return on any investment made might be different from the…

Q: Which of the following risks cannot be hedged? A. Credit B. Liquidity C. Currency D. Duration

A: Some risk can be hedged using derivatives

Q: How the following risk can be mitigated and managed 1. Market risk 2. Liquidity risk 3. Insolvency…

A: Market risk is also known as systematic risk, that involves uncertainty with any investment…

Q: An inflation hedge is an asset that increases in value at a rate equal to or greater than the rate…

A: Hedging is technique of reducing risk. This reduction in risk also results typically in a decrease…

Q: Equity investors expect to be compensated for two things

A: In financial terms, risk can be defined as the possibility that the real profits from an outcome or…

Q: 1. Lower duration means higher interest rates risk (inverse relationship). Select one: True False

A:

Q: how does interest rate risk relates to the washinton Mutual Case

A: Interest rate risk is the risk of an investment's value changing due to changes in interest rates.…

Q: The unbiased expectations theory assumes investors are: A. Risk seeking В. Risk neutral C. Risk…

A: The theory assumes that the investors are risk neutral

Q: When would I use the arithmetic average risk premium (as opposed to the geometric risk premium)?

A: The arithmetic average risk premium is calculated as the difference between the average return of an…

Q: TRUE / FALSE The discount rate used to discount the value of future dollars can generally be…

A: The present value of an investment is the value of all future cash flows that have been discounted…

Q: When using the internal rate of return method, interest payments should OA. not be discounted OB. be…

A: While using Internal rate of return calculation we have to discount each element of income and cost…

Q: Should the analyses show the sensitivity of the discounted net present value and other outcomes?

A: The question is based on the concept of a sensitivity analysis, used as a analysis tool in capital…

Q: Explain the difference between the unbiased expectations theory of the term structure of interest…

A: There are different theories that describe how the interest rates are set.

Q: The W.A.C.C. is a :  a Composite opportunity cost metric  b Simple opportunity cost metric  c…

A: The overall cost of capital, also known as the Weighted average cost of capital (WACC), is the…

Q: Fisher effect defines the relationship between nominal rates, real rates, inflation, default…

A: Fischer effect- It is named after economist Irving Fischer.

Q: The discount rate is the combination of what two types of discounting?   a. exponential and linear…

A: Discount rates are used for discounting the future cash flows. It helps in determining the time…

Q: The expected return on the market is the risk-free rate plus the A. diversified returns B.…

A: According to CAPM model: expected return=rf+beta×rm-rfwhere,rf=risk free raterm=market return

Q: Which of the following is not a discounted technique Select one: a. Net present value b. Discounted…

A: Discounted technique is a technique to determine the present value of future cash flows.

Q: A "risk-premium" is the difference between ___________________________ . A) the variance of a…

A: Solution:- Capital Asset Pricing Model (CAPM) is the equity model to determine the expected rate of…

Q: Risk designates any uncertainty that might trigger losses. These risks include all except:

A: Risk in finance refers to the vulnerability with regard to speculation that may have an adverse…

Q: 1) List the six different definitions of value?

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

Q: Market risk is referred to as: systematic risk. total risk. diversifiable risk. asset specific…

A: Market risk is the type of risk that affects the whole market. Market risk is not specific to a…

Q: The risk associated with the overall market is referred to as _____ risk. a. unsystematic b.…

A: (a) Unsystematic risk also known as nonsystematic risk which refers to the risk that is unique for…

Q: Determine how the appropriate yield to be offered on a security is affected by a higher risk-free…

A: Risk-free rate.:- The theoretical rate of return on a risk-free investment is known as the risk-free…

Q: The systematic risk principle states that the expected return on a risky asset depends only on which…

A: Systematic risk is the risk which is experienced by all the firms in an industry and it is…

Q: Market risk embodies the following risks except: O a. Financial. O b. Interest rate. Tax. O d.…

A: Market risk is a undiversified risk which cannot be controlled. It is a systematic risk that affects…

Q: Theta measures an option's: Multiple Choice O O O intrinsic value. volatility. rate of time decay.…

A: Theta measures an option's rate of time decay. It also tells us how much the  option value will…

Q: In the periods of inflation, the historical cost model .can communicate useful and correct…

A: Inflation is the increase in the general prices of goods and services that leads to a decrease in…

Q: Which one of the following elements of credit risk does not comprise Standalone Risk Default…

A: Standalone risk is the creation of risk by the specified division, project, or asset. It can be…

Q: Define the terms, or give short explanations.           -risk-free rate -risk management…

A: Risk refers to the uncertainty or probability of an investment incurring losses or not achieving its…

Q: ) define a protective put.     l) demonstrate an understanding of the position of buying a…

A: Put option provides the right to its holder to sell the underlying stock at the prespecified price,…

Q: ) Finance Which one is a financial risk? Select one: a. Uncertainty about demand b. uncertainty…

A: Meaning of Financial risk is diffrent for different category of person. In case of individual who is…

Q: The risk-adjusted discount rate reduces investment. True or false?

A: The estimation of the present value of cash for high-risk investment is known as a risk-adjusted…

Q: What is the difference between cap rate and discount rate? Explain in detail and no plagiarism .

A: In the valuation of the real estate there are two types of the interest rate one is discount rate…