What is risk? Although many risks (e.g., career risk, risk of how many children to have and whether they will succeed morally and academically, etc.) in the real world are not tradable, some risks (e.g., stock price risk, credit risk, interest rate risk, currency exchange rate risk, risks that insurance policies cover, etc.) are actively traded in the market. What determine the equilibrium price of tradable risks?

Q: Hedging is a risk management strategy that is used in limiting or offsetting probability of loss…

A: Financial risk managers analyse the market trend and accordingly take financial decisions.Roles and…

Q: what better to suggest in terms of investing, to invest in a low risk outlet such as the money…

A: To answer the above question one needs to understand what is a low-risk outlet and what is a…

Q: ing process, and hence investment markets are efficient, reflecting all available information in…

A: There are many theories in the finance which explain the behavior of investors and the market.

Q: Is it reasonable to ignore IDIOSYNCRATIC RISK and care only about MARKET (SYSTEMIC) risk? What about…

A: Definitions  Idiosyncratic risk : In simple words, idiosyncratic risk can be understood as the risk…

Q: Why a risk taker (likes to take risk) type of investor prefer equities over fixed income?

A: Risk takers are the individuals who are willing to take risk besides the consequences comes with it.…

Q: If only some investors perform security analysis while all others hold the market portfolio, would…

A: The Capital Market Line (CML) is a subset of the CAL, which is the line that depicts an investor's…

Q: Which is correct about security valuation? A. In an efficient market, several factors would affect…

A: The process that is used in order to determine the fair value of the security, as well as any type…

Q: What are the risk implications for an investor for a returns series that exhibits fat tails?

A: Fat tails means that there are more than three standard DEVIATION movements more than normal…

Q: Would a market-neutral hedge fund be a good candidate for an investor’s entire retirement portfolio?…

A: The investment options available to an investor which uses various strategies to generate revenues…

Q: will you suggest to a relative, to invest in a low risk outlet such as the money market or to a high…

A: In this we have to choose between the debt and equity and choose the proper based on our risk…

Q: How is risk defined and measured? How might the magnitude of the market risk premium impact…

A: In financial terms, the risk is referred to as the possibility that an outcome's actual gains will…

Q: omparing Value at Risk (VAR) and Expected Shortfall (ES), which is preferred by regulators for…

A: VAR that is value at risk and another is ES expected shortfall these are two methods to measure the…

Q: Hedging is a risk management strategy that is used in limiting or offsetting probability of loss…

A: Financial risk managers analyse the market trend and accordingly take financial decisions. Roles and…

Q: Which of the following is NOT true?     In risk-neutral valuation the risk-free rate is used to…

A: In risk-neutral valuation, it is assumed that the expected return on all investments is risk-free…

Q: According to Peter Bernstein "When we take a risk, we are betting an outcome that will result from a…

A: Risk can be described as the possibility of the actual outcome of an event being different from…

Q: What are efficient markets? Imagine if the price of a stock is going up and financial markets are…

A: A stock market can be defined as a place where an investor can buy or sell the securities. A stock…

Q: discuss  the advanatages and disadvantages of options in the financial markets?

A: Advantages: The market is in fluctuation. In these circumstances the seller and buyer should use the…

Q: Both investors and gamblers take on risk. The difference between an investor and a gambler is that…

A:

Q: How can an investor eliminate Unsystematic Risk?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk. Systematic risk is non…

Q: ld I manage my portfolio's risk in the current financial environment (Ex: COVID-19, inflation,…

A: Today we are living in the highly uncertain and volatile and inflationary environment where the…

Q: The value of an investment can be defined in numerous ways. Which is FALSE?  a. It is the value…

A: There are many different types valuation method of the investment some depends on the cash flow or…

Q: Given that higher-risk investments, such as small-company stocks, have outperformed other…

A: It is first important to understand the objective of investment in different asset classes and…

Q: From the perspective of the treasury professional, which of the following is a type of market risk…

A: Financial risk is the risk that that indicate the chances of loss that can be incurred to the…

Q: Why is the historical investor risk premium so much higher than the implied investor risk premium in…

A: Risk premium refers to the return on the investment that is expected by an asset as a yield that…

Q: Which of the following is true of risk-return trade off? A) Risk can be measured on the basis of…

A: Risk are there in financial world but no return exists in financial world without risk.

Q: of investor prefer fixed income

A: Risk-Averse-: Some investor who is a Risk-Averse has the trait of inclining toward preventing loss…

Q: How can an investor eliminate Systematic risk?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk

Q: portant topic that usually only economists observe.

A: Basically, risk the executives happens when an investor or fund manager investigates and endeavors…

Q: What is the difference between conservative, risky, balanced, adventurous, and speculative investor?

A: An investor is an individual, company, or any institution that block it's capital in expectations of…

Q: What does it mean to say that an investor is risk-averse? Select one: a. The greater the return…

A: The investor would invest in government bonds but would never invest in the share market.

Q: What is idiosyncratic risk? How does it differ from market risk?

A: Idiosyncratic risk or unsystematic risk or specific risk is that risk which belongs to specific…

Q: What are some benefits of owning stocks? How can you mitigate the risk?

A: Owning stocks brings with itself its own unique set of risks and benefits.

Q: Why is it reasonable to ignore diversifiable risk and care only about nondiversififiable risk? What…

A: Diversifiable risk is that risk that can be easily diversified by making the investment into…

Q: Is the following statement true or false. Briefly explain your answer. “There can not be a…

A: Risk-free assets refers to financial assets which doesn’t carry any risk with return associated to…

Q: What type of security can be used to minimize both price risk and reinvestment riskfor an investor…

A: The term price risk refers to the increase or decrease in the price of the bonds as a result of…

Q: what better to suggest in investing, to invest in a low risk outlet such as the money market or to a…

A: What to invest in will depend on factors like the investment goal of the concerned person, his/her…

Q: Why are investors risk-averse? How can investors deal with different degrees of risk?

A: In the world of investment, the risk is price volatility. A volatile investment may either make you…

Q: Why should stock market investors ignore specific risks when calculating required rates of return? O…

A:

Q: You are a risk-averse investor. Would you therefore invest in financial assets that have a high or a…

A: The risk-averse investors are those investors who prefer the lower return with lower risk instead of…

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: 1.What is the relationship between an investment’s risk and its return? Please provide examples if…

A: Note:  As per our policy, we only answer one question, when more than one question is posted. The…

Q: discuss the advantages and disadvantages of options in the financial market

A: Options are financial instruments which derives its value from an underlying asset. The buyer of the…

Q: Suggest what is the best financial instrument to offset market risk exposure and from market…

A: Derivatives are considered as the best financial instruments to offset the exposure of market risk…

Q: Consider the following information (Assume that Security M and Security N are in the same financial…

A: Total risk is the combination of systematic risk and unsystematic risk. Systematic risk is that part…