What is a risk measure? a Alpha  b Required return on the market portfolio  c Standard deviation of historical returns

Q: Which of the following measures reflects the excess return earned on a portfolio per unit of its…

A: Treynor's measure is the measure of excess return earned per unit of beta of portfolio. ​ Treynor…

Q: standard deviation of historical returns Market beta Tracking error risk Discuss in what scenario…

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

Q: Risk and Return Suppose you hold an asset that delivers a return R;. You wish to hedge against a…

A: Each asset has different return as per their risk level. CAPM measures the asset return or portfolio…

Q: Which of the following statements regarding non-systematic risk, systematic risk and total risk…

A: Systematic risk is the risk derived from the market and which is measured by the beta of the stock…

Q: Which of the following statements about expected rate of return is most correct? The weighted…

A: EXPECTED RETURN = RISK FREE RATE + BETA X MARKET RISK PREMIUM.

Q: xplain the difference between (a) stand-alone risk and (b) risk in a portfolio context. How are they…

A: Stand-alone In terms of how they are calculated and analyzed, risk and portfolio risk are not the…

Q: Which of the following statements about the Security Market Line are correct? I. The intercept point…

A: Security Market is a simple concept. It is the graphical representation of the Capital Asset Pricing…

Q: 1. The diversifiable risk of a portfolio: a. Is correlated with systematic risk. b. Can be made…

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

Q: Market rate of return Risk premium Risk-free rate of return Systematic Risk (Beta) Return (%)

A: Security market line (SML) is a graphical representation of the expected rate of return of assets at…

Q: The additional return over the risk-free rate needed to compensate investors for assuming an average…

A: Basis the general principle that higher risk security do have the higher returns, it is known that…

Q: A portfolio that is positively correlated with the market portfolio but not particularly sensitive…

A: In statistics, +1.0 beta value represents a perfect positive correlation. 0 denotes no correlation…

Q: ) What does the single index model estimate? B) What is the market risk premium? C) What does Beta…

A: A single index model simplifies security analysis by estimating the expected return on security…

Q: Which of the following statements is TRUE? O a. A decrease in the inflation rate will lead to an…

A: A security market line, or SML, is a graphical representation of the expected returns a security…

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: . The difference between the expected (c equired) return for the market portfolio ar he risk-free…

A: This pertains to the CAPM (capital asset pricing model). The difference between expected return on a…

Q: What assumption about risk-adjusted techniques for measuring performance poses a potential problem?…

A: Uneven price change is the main problem in the Risk adjusted performance measurement. Options given…

Q: Beta is which of the following: A) standard deviation. B) total risk. C) Beta is the relationship…

A: option C is correct  Beta is the relationship which is between an investment's return, and the…

Q: Standard deviation of portfolio returns is a measure of ___________.   Group of answer choices…

A: Standard deviations of portfolio give the standard deviations of return of portfolio.

Q: What is definitions of this?   Systematic risk  Risk free rate of return  Market rate of…

A: Capital asset pricing model (CAPM) can be used to compute the return expected by the investors by…

Q: arket's Risk premium measures Select one: a. The market return plus the risk free rate. b. The…

A: The market risk premium represents the market participants demand extra return by increasing the…

Q: Examine (i) the relation between market returns and investor sentiment, and (ii) the relation…

A: the relationship between the market returns investor sentiment and conditional volatility is stated…

Q: Which one of the following is the formula that explains the relationship between the expected return…

A: The risks which is common for all business entities operating in the economic environment then the…

Q: For a market timer, the ________ will be higher when the market risk premium is higher Select one:…

A: The portfolio beta will be reflective of the systematic risk associated with a particular asset and…

Q: Given the beta is a relative measure of systematic risk, it is reasonable to assume that there…

A: Systematic risk cannot be diversified and is correlated with that of the market portfolio. All…

Q: The security market line depicts:   a. Expected return as a function of systematic risk (indicated…

A: The security market line (SML) is a graphical representation of the capital asset pricing model…

Q: Explain the following Financial Terminology and then determined the relationship between its.…

A: Efficient Portfolio – It is the Portfolio that lines on the CML (capital market line) and maximizes…

Q: It measures the sensitivity of the return of a security to changes in the return of a common index…

A: Concept- Sensitivity of the return of a security to changes in the return of a common index means…

Q: Determine which of A or B is over-valued or undervalued.

A: Stock value (Intrinsic value): It is the true estimated value of a stock and if the intrinsic value…

Q: b) Give a graphical example to present the positioning of. E Systematic risk E Risk free rate of…

A: Risk is the uncertainty associated with an investment. The investor receive higher return to…

Q: Whats the difference between a price momentum strategy and an earnings momentum strategy. Under what…

A: In order to receiving better returns after specific period of time, investors plan to invest first.…

Q: The CAPM states that the expected (required) return on an asset is : E(Ri)=Rf+βi[E(RM)−Rf] where…

A: The Market portfolio will be reflective of a portfolio which has completely eliminated all the…

Q: What does beta represent? Multiple Choice Beta is a measure of covariance standardized by the…

A: Beta of a stock measures the volatility with relation to the overall market. Market has a beta of 1,…

Q: The measure of risk for a security held in a diversified portfolio is:a. Specific risk.b. Standard…

A: the standard deviation of returns is the measure of risk which measures the dispersion of variables.…

Q: What is the equation for the Security Market Line? Define each term. If an asset has a beta of 2.0,…

A: The security market line represents the capital asset pricing model (CAPM) on the graph. The…

Q: Assume that the expected rates of return and the beta coefficients of the alternatives supplied by…

A: Beta coefficient is a relative risk measure. It measures and indicates risk of a particular security…

Q: Return on a portfolio of two risky assets which are perfectly negatively correlated is equivalent to…

A: Two assets which are having negatively correlated which means risk can be can be reduced to zero.…

Q: The security market line has a slope equal to the   a) Risk-free rate b) Market risk premium c)…

A: Security market line is the line shown on a graph that represents the relationship between the…

Q: how do financial analysts determine the portfolio that has the lowest risk and yields a high…

A: The combination of investments undertaken to minimize the risk and maximize the return is called…

Q: Explain what is meant by beta. What risk does beta measure? What is the market return? How is the…

A: Beta is measure of risk and volatility of stock.

Q: Compare and contrast the risk versus expected rate of return tradeoff, the security market line, and…

A: Risk is an important factor in overall investment process and risk is directly correlated with the…

Q: What statistical concept do many portfolio managers use to represent a risk when considering…

A: The return an individual or organisation gets from any investment portfolio is termed as investment…

Q: Which statement is true? Multiple Choice ___ The larger the standard deviation, the lower the…

A: Standard deviation :— Standard Deviations is a basic mathematical concepts that measures volatility…