When adding a risky asset to a portfolio of may risky assets, which property of the asset has a greater influence on risk: its standard deviation or its covariance with other assets? Explain
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When adding a risky asset to a portfolio of may risky assets, which property of the asset has
a greater influence on risk: its standard deviation or its covariance with other assets? Explain
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- What is the best way to measure of risk for an asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?How do investors account for risk when determining an asset’s value?How do an investment's required rate of return vary with perceived risk? Explain with an example?
- What is the relationship of risk to the investment?A reasonable probability that an investment will produce a loss a. risk b. value c. specualtion d. capital gainThe systematic risk principle states that the expected return on a risky asset depends only on which one of the following? Unsystematic risk Market risk Diversifiable risk
- Why should age, income, nearness to goal, risk tolerance, and existing assets be considered when allocating assets in a portfolio?The capital asset pricing model (CAPM) contends that there is systematic and unsystematic risk for an individual security. Which is the relevant risk variable and why is it relevant? Why is the other risk variable not relevant?Question Details Unsystematic risk is also known as unique risk. asset-specific risk. diversifiable risk. all of the above
- How do you plot the risk-return for the different weight of assets?Define the term exposure to financial risk?When adding real estate to an asset allocation program that currently includes only stocks, bonds, and cash, which of the properties of real estate returns affect portfolio risk? Explain.a. Standard deviation.b. Expected return.c. Correlation with returns of the other asset classes.