Which of the following is true of risk-return trade off? A) Risk can be measured on the basis of variability of return. B) Risk and return are inversely proportional

Q: - explain what would you take to compare the worthness of two different fianancial investments? how…

A: Solution- Meaning of economic Investment A  Financial Investment is AN plus or instrument purchased…

Q: Capital Asset Pricing Model is based on certain assumptions, which have been criticized after…

A: Asset pricing is a linear function of the beta value of market return: When the market returns…

Q: What is a satisfactory investment? When the present value of benefits exceeds the cost of an…

A: Satisfactory investment refers to an investment  wherein the present value of benefits after…

Q: Which of the following is not a determinant of investment? a) The efficiency of capital equipment…

A: To increase capital assets, business do investments in property, fixed assets, financial market,…

Q: According to CAPM which of the following statements is (are) correct? #1 Financial assets with the…

A: Capital Asset pricing model is a model which is used to compute the required return of stocks taking…

Q: Which of the following statements is false?   A.   Funding risk is the risk that a firm will not…

A: The concept of risk is linked to the uncertainty of future occurrences that may or may not occur.…

Q: What is meant by excessive portfolio turnover? Which behavioral bias is primarily responsible for…

A: Portfolio turnover is a measure of how quickly the management of a fund buy or sell shares over a…

Q: The following are the reasons why investors are holding different investment despite of having…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

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

A: (Markets end in red over poor investment sentiments)

Q: sk is the potential for an investment to generate more than one return. A security that will produce…

A: While investment there are potential risk to the investment due to which return realized vary…

Q: Contrast the modern construct for FISIM with a measure that sub- tracts deposits from the financial…

A: Financial Intermediation Services Indirectly Measured (FISIM) In general, only a small part of…

Q: What does the term “risk” mean in the context of capital budgeting; to what extent can risk be…

A: Capital budgeting is a process whereby a firm or an investor evaluates all the long-term…

Q: Some financial theorists consider the variance of the distribution of expected rates of return to be…

A: The variance of expected rates of returns describes a measure of the dispersion of real/actual…

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 one of the following is the hypothesis that securities markets are efficient?   Multiple…

A: The security market is a subset of the larger financial market in which securities can be bought and…

Q: Which of the following statements is TRUE about risk-free investment? a. Return in risk-free…

A: Risk free investment is an investment which gives low consistent returns and is a safe, secure…

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: When it comes to investment performance, what statistical notion do many portfolio managers employ…

A: Investment performance refers to money that a person or organization earns from a particular…

Q: If we are speaking about the CAPM model and undiversifiable risks.    Then what is meant by…

A: CAPM model The Capital asset pricing model (CAPM) refers to an idea that describes the systematic…

Q: Firms will take investments only when expected risks are remunerated by expected profit. *   a.…

A: Every investment comes with its own set of benefits and risks. Every company must make a decision on…

Q: Which of the following is a criticism of a policy of maximizing the firm’s return on equity (ROE)?…

A: The question is based on the concept return on equity (ROE) ROE is a part of ratio analysis to find…

Q: What is investor overreaction? Which behavioral bias is primarily responsible for this effect, and…

A: Before going to give solution we need to know about some basic terms like investors. Investor is the…

Q: Why are rates of return superior to dollar returns when comparingdifferent potential investments?

A: A rate of return (ROR) refers to the net income or loss of an investment over a given timeframe as a…

Q: Which of the following is consistent with a steeply upwardly sloping yield curve?a. Monetary policy…

A: Monetary policy: The monetary policies are utilized by government to go-slow economic growth by…

Q: The measure of risk is called:   Group of answer choices The rate provided by short term government…

A: Risk is defined in financial terms as the probability or uncertainty that an outcome or an…

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: 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: Market timers focus onusing overall market trends as a basis for predicting when to buy or sell…

A: Fundamental Analysis deals with analysing the financial statements and reports of the company. It…

Q: Concerning the EBIT-EPS indifference analysis, which of the following statements is accurate? If…

A: EBIT-EPS analysis is the financial tool used to evaluated different alternatives of project…

Q: Sensitivity analysis is concerned with determining how much variation in financial data, the…

A: Sensitivity  analysis is a monetary model that decides what target factors are meant for dependent…

Q: stor who wish to take high risk would invest his money in Risk is interrelated to returns Debt…

A: Investor is defined as the person or individual who assign the capital with the future expectation…

Q: How does the risk return trade-off relate to the financial manager's main goal?

A: The main goal for a financial manager is to generate the maximum value of the firm to its owners.…

Q: What are the similarities and differences between the CML and SML as models of the risk return…

A: CML is an abbreviation for Capital Market Line and SML is an abbreviation for Security Market Line.…

Q: 1. Define the components of holding period return. Can any of these components be negative? 2. How…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: Do you agree with the following statement? And explain why. “The Capital Asset Pricing Model [CAPM]…

A: The Capital Asset Pricing model is used to price securities based on its systematic risk. It…

Q: In general, the the correlation between asset returns, the the risk reduction that investors can…

A: Correlation measures the extent to which two variables are interrelated. The correlation coefficient…

Q: is the ris K of a decline in tne value of a security or an investmer excluding a downturn in the…

A: When cash flows from the investment cannot be reinvested at current interest rate, it is…

Q: investment anomalies and biases that illustrate investor’s deviation from CAPM.

A: Capital Asset Pricing Model (CAPM) is used as a relationship between the required rate of return and…

Q: When comparing NPV and IRR, which is incorrect? With NPV, the discount rate can be adjusted to take…

A: Net present value is the difference between the present value of cash inflows and cash outflows.…

Q: Risk means, in today's language, the probability of something bad happening or an unfortunate…

A: investors invest money in the market to earn some profit if they don't earn profit They will not…

Q: Would you expect positive covariances of returns between different types of assets such as returns…

A: Covariance is the measure of the degree to which two variables move together relative to their…

Q: Which of the following statements is true? Group of answer choices The Principle of Diversification…

A: Diversification is investing our money in different asset classes so that we can minimize risk

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.