Risk sharing is also called... Select one: asset discounting All the answers are correct liability transformation asset transformation asset selection

Q: How to compare different assets in investment selection process? What are the quantitative…

A: One of the important decisions that financial managers are supposed to take is that they have to…

Q: Describe Asset/Liability Models and explain why it is better than Value-at-Risk Models for Portfolio…

A: The process through the use of assets and liabilities are managed in such a way that the risk of…

Q: What determines the value of an economic asset (as opposed to an asset that has value for reason of…

A: Asset value is an important component of a company's total value and it can be…

Q: When lower profits and asset valuations are estimated when in doubt, the principle is applied.…

A: Conservatism principle refers to the set of guidelines of bookkeeping which ensures a high…

Q: There are several asset pricing models used to determine an asset’s intrinsic value, the most…

A:

Q: Asset allocation is performed to A) reduce the load that intermediaries charge maximize the earning…

A: Asset Allocation means the process of allocating money across different financial assets (such as…

Q: What are the benefits of merging and diversifying one's assets in order to lower one's risk?

A: Diversification is a process of combining different types of assets with lower correlation in order…

Q: The Capital Asset Pricing Model (CAPM) asserts that an asset’s expected return is equal to the…

A: Based on CAPM, Expected return on security = Risk free rate + Beta * Market risk premium

Q: Explain what’s wrong with the following logic to construct multifactor asset pricing models. Start…

A: The model that uses multiple factors to arise at a certain result is called a multi-factor model. It…

Q: Describe the capital asset pricing model and explain the role of beta as a risk measurement tool.

A: Answer

Q: What are the three factors that the expected return on any risky asset is composed of?

A: Following are the three factors that the expected return on any risky asset is composed of:…

Q: What does it mean to adopt a maturity matching approach to financing assets, includingcurrent…

A: Maturity matching states that long period funds must be utilized to finance long period assets and…

Q: Discuss the main features of Capital Asset Pricing Model (CAPM) and comment on the validity of the…

A: The capital asset pricing model is a risk adjusted model which will be helpful in finding the…

Q: Please I want answer for this according to your understanding and experience. Thanks

A: Current asset: These are short-period assets claimed and owned by an organization for 12 months…

Q: What does it mean to adopt a maturity matching approach to financing assets, including current…

A: Matching concept while preparing the income statement , revenue  and profits are matched with…

Q: Draw a graph showing the feasible set of risky assets, the efficientfrontier, the risk-free asset,…

A: To sketch the graph showing the feasible set of risky assets, the efficient frontier, the risk-free…

Q: The amount for which an asset could be exchanged, a liability settled , or an equity instrument…

A: The amount for which an asset could be exchanged, a liability settled , or an equity instrument…

Q: How do investors account for risk when determining an asset’s value?

A: Asset valuation helps to determine the fair value of the asset. Various asset valuation models such…

Q: In the case of the net present value technique, explain how the cost of capital is used as a…

A: The question tells about the net present value technique and  how the cost of capital is used as a…

Q: Discuss the risks associated with short selling an asset. Use examples and empirical evidence in…

A: A short-selling of an asset or stock means that the investor sells the borrowed securities…

Q: When discussing a mix of risky assets please briefly explain the following concepts, making sure…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three subparts…

Q: explain silent feartures of these three methods. Asset Based Valuation, Earning Based Valuation…

A: An asset-based valuation is a form of valuation in business that focuses on the value of a company's…

Q: 12. which of the following is one or more feature of asset conversion strategy A liquid asset has a…

A: What is the definition of a liquid asset? It must possess three qualities: 1. Must have a ready…

Q: 10 The following are the Asset and Liabilities Management (ALM) strategies except:*         A.…

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Q: True or False Investment bankers and other valuation professionals often utilize relative valuation…

A: Long term investments are the investment or assets that are beneficial for the firm for a number of…

Q: hat situational circumstances can the Asset-based valuation be

A: Valuation is the process of determining the fair market value of a company's assets or operations.…

Q: Asset pricing Models provide a logical basis for computing the risk premiums and determining the…

A: Capital Asset Pricing Model (CAPM) is tool used to calculate the systemic risk of a asset. CAPM…

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: Which of the following best explains the role of diversification as part of an investment strategy?…

A: Diversification refers to the investment strategy that can be used by an investors so that they can…

Q: Whenever you make an investment decision, you need to consider its impacts on the diversification of…

A: Investment decision and diversification go hand in hand. One should be careful while making an…

Q: Three main goals of Asset Liability Management are all of the following except: Group of answer…

A: Corporate finance is referred as the decision of the firm to take capital investments and other…

Q: "Combining two assets in a portfolio always provides at least some diversification. benefit." React…

A: The above mentioned step is True.

Q: Relative Valuation links an asset's value to its inherent qualities, such as its ability to produce…

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

Q: Which of the followings is NOT in the scope of investment planning? a. To develop a risk-free…

A: Financial planning is a term that refers to estimating a company's funding needs and determining how…

Q: True or false   DCF Approach Model examines the price of "similar" assets in relation to a common…

A: 1. DCF Approach Model examines the price of "similar" assets in relation to a common variable, such…

Q: Describe the principles of asset valuation. Distinguish between the required rate of return and…

A: Asset Valuation means that a company or business is studied to understand what will be the intrinsic…

Q: Briefly explain the meaning of working capital and working capital management. Also explain the…

A: Explaination: Working capital is an essential term that measures the amount of operational cash…

Q: Explain briefly what the terms working capital and working capital management imply. Explain the…

A: The Answer:

Q: Define each of the following terms:d. Current asset financing policies: maturity matching,…

A: Maturity matching financing policy : Maturity balancing or hedging can be understood as the working…

Q: Select the investment accounting approach with the ­correct valuation approach:     Not…

A: Fair value: Fair value is the price at which, both seller and buyer agree to exchange the asset. So,…

Q: Which control is not a part of the fixed asset system?a. formal analysis of the purchase requestb.…

A:

Q: True or False   Relative Valuation links an asset's value to its inherent qualities, such as its…

A: Relative Valuation links an asset's value to its inherent qualities, such as its ability to produce…

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.