When comparing investments that have different means, the measures the relative riskiness of each investment and is a better indicator of risk than the standard deviation.

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 is the relationship of a portfolio standard deviation to the weighted average standard…

A: The standard deviation measures volatility of an investment or the risk of an investment. The…

Q: What is the relationship between correlation and the risk of the portfolio's rate of return? i.…

A: Correlation represents the degree of relationship between the movement of prices of assets in a…

Q: Using a payback period rule tends to bias investors toward Select one: a. riskier investments. b.…

A: Payback period: This method is used to calculate how many years a project will take to recover its…

Q: A measure of how the returns of two risky assets move in relation to each other is the:

A: By calculating covariance we can identify in what direction the returns move for two securities.

Q: Which of the following statements is true? Select one: Total risk = market risk + unique risk.…

A: systematic risk is beta

Q: Portfolio standard deviation is negatively associated with the covariance among the assets in the…

A: The portfolio standard deviation is the financial measure which computes the investment risk and…

Q: Which of the following statements about payback (payback period) is most correct?   a.  Payback…

A: Payback period is a financial metric that measures the length of time it takes for an investment to…

Q: Morningstar's Risk-Adjusted Rating most closely resembles which measure? The Treynor Index Jensen's…

A: Financial statements are statements which states the business activities performed by the company .…

Q: 15. Standard deviation can be used to measure a) Risk of an investment, b) Return of an investment,…

A: The correct answer is: a) Risk of an investment.

Q: Which of the following statements is correct?   Select one: a.   Assuming a correlation…

A: The combination of stock will reduce the overall risk of the portfolio but it it depends on the…

Q: What are quantitative measurements versus non-quantitative measurements with respect to risk?

A: Risk is used to describe the probability or uncertainty related to a future event with a favorable…

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

A: Answer

Q: Which of the following decision criteria is the easiest to use and very popular among investors?…

A: The capital budgeting process uses different methods to analyze the projects. Each method has…

Q: The following is a concise explanation of the primary investment risk characteristics that investors…

A: Introduction : Investing assessment and appraisal is crucial for investors because it is a kind of…

Q: The contribution of an individual asset to the riskiness of a fully diversified portfolio depends…

A: A portfolio is made up of two or more than two stocks. A well-diversified portfolio is that…

Q: Total risk can be divided into: standard deviation and variance. standard deviation and covariance.…

A: Risk is the probability of loss. It describes the chance that there will be a negative return or…

Q: 16. helps the investor to determine the suitable types of investments. A. Risk taker B. Risk adverse…

A: Risk of an investment asset is the fluctuation possible on the return. The riskier the asset, higher…

Q: While comparing investment returns is an important starting point in evaluating investment…

A: Following are the steps involved in the performance analysis of investments:Identification of the…

Q: In conducting a sensitivity analysis, the only parameter that represents a measure of worth is:a.…

A: Sensitivity analysis A financial model which helps in determining how the target variables get…

Q: Q3. Explain the following A) Measure of historical returns (Single Asset) B) Measure of historical…

A: Return= Total gain/loss on an asset over a given period of time.

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: Which of the following statements is true for compensation of risk? a. Higher the risk, lower is the…

A: The Statement for compensation of risk is as under-

Q: Discuss how the Accounting Rate of Return as an investment appraisal method is better than the Net…

A: Accounting ROR or ARR and Net Present Value(NPV) are tools that are used to make selection among…

Q: The  payback period is more preferable and the most  accurate investment criteria that could be used…

A: The time it will take for a business to recover an investment is known as the payback period. Think…

Q: What information would be required to compute the risk-asset ratio under Basle I?

A: The risk asset ratio (RAR) measures the amount of a bank's total regulatory capital in relation to…

Q: Which is riskier lower IRR or a higher IRR? Please explain and incorporate differences in risk based…

A: According to the internal rate of return (IRR) rule, a project or investment should be undertaken if…

Q: What are the limitations/problems from classifying performance using raw returns? and, What are the…

A: Limitations of classifying performance using raw returns: Raw data may be incomplete and may not…

Q: Identify two disadvantages of using the payback period for comparing investments.

A:

Q: Why may the net-present-value and internal-rate-ofreturn methods yield different rankings for…

A:

Q: 1.) Which is false concerning standard deviation? a. The smaller the standard deviation is the less…

A: Standard deviation measures the deviations of dataset from the expected mean . In finance, standard…

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: 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: How does the application of the standard deviation differ from the application of the coefficient of…

A: a. Standard Deviation: The average fluctuation of a variable around the mean is known as standard…

Q: Explain if the operational risk is considered a risk or uncertainty? Why? If it is a risk, how can…

A: Operational Loss:   The risk involved in failures of Man, Machine, Material, and Methods during…

Q: Which of the following statements describing the elements of intrinsic valuation is most accurate?…

A: Intrinsic value of any project or any assets is how value being added by asset to value of investors…