The 'world beta measures the Select one: O a risk of default and bankruptey. Ob risk-adjusted performance. O c. unsystematic risk. Od sensitivity of returns on a security to world market movements.
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- The additional return over the risk-free rate needed to compensate investors for assuming an average amount of risk. a. Market Risk Premium b. Risk-free rate С. Stock's beta O d. Security Market Line e. Required Return on StockRm-R is read as: O a. The return offered by the market over and above the risk-free rate O b. Market risk premium- Oc. Excess return on the market C. Od. All options are correctThe risk associated with the overall market is referred to as _____ risk. a. unsystematic b. diversified c. portfolio d. systematic
- What is a risk measure? a Alpha b Required return on the market portfolio c Standard deviation of historical returnsQuestion 2 a) Plot the Security Market Line (SML).b) Superimpose the CAPM’s required return on the SML.c) Indicate which investments will plot on, above and below the SML?d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graphvuunyiuunu assumption of "y. Q2. How portfolio return and risk is calculated? Explain the role of correlation among asset in portfolio? Why this correlation is important?
- A change in the risk premium, E(Rm) - Rf, results in... Group of answer choices 1. A change in the vertical intercept of the Security Market Line (SML) 2. No change in the return/beta relationship. 3. A change in the horizontal intercept of the Security Market Line (SML) 4. A change in the slope of the Security Market Line (SML)Consider the following information (Assume that Security M and Security N are in the same financial market and the market is efficient): Standard Deviation BetaSecurity M 20% 1.25Security N 30% 0.80 Which security has more systematic risk? Group of answer choices Security M Security N Equal4.What is the expected return, Standard denation and Coeknicient of vanation of an equally werghted port folLo OF technology, T-bills and inernatin et Funds? tiDW does your Dort folio risk and return compane to that Of the Spp500 index?
- QUESTION 2 For which type of risk do you get rewarded with a higher expected return? a. Firm-specific risk Ob. Total risk C. Diversifiable risk d. Unknown е. Systematic riskAn efficient capital market is best defined as a market in which security prices reflect which one of the following? Multiple Choice A Current inflation B A risk premium C All available information D The historical arithmetic rate of return E The historical geometric rate of returnb) Give a graphical example to present the positioning of. E Systematic risk E Risk free rate of returm E Market rate of return, and E Risk premium.