A portfolio is made up of a group of individual assets held in combination. An asset that would be relatively risky if held in isolation may have little, or even no risk if held in a well-diversified portfolio.…
certain risk tolerance and may elect to incur some risk; this is known as a risk…
The best way to minimize the risk associated with investing is really getting to know what you are investing in and getting to know each risk with each stock/bond/or mutual fund you are investing in. The best way is by diversifying your portfolio which means buying a single type of asset from many different companies. This hedges against the risk that a single company or industry will perform poorly or go bankrupt.…
5. _________ is the chance of loss or the variability of returns associated with a given asset.…
* Risk - The potential that a chosen action or activity will lead to a loss. Investors sometimes choose to put their money in risky investments because these investments offer higher expected returns. The more risk an investment has, the higher will be its expected return.…
A less risky investment with a higher rate of return might be a better alternative to investing in…
Know your tolerance for risk – the risk in equities is reduced the longer time period you hold them.…
2.Finance: The probability that an actual return on an investment will be lower than the expected return. Financial risk is divided into the following categories: Basic risk, Capital risk, Country risk, Default risk, Delivery risk, Economic risk, Exchange rate risk, Interest rate risk, Liquidity risk, Operations risk, Payment system risk, Political risk, Refinancing risk, Reinvestment risk, Settlement risk, Sovereign risk, and Underwriting risk.…
If one defines incremental cost as the change in total cost resulting from a decision, and incremental revenue as the change in total revenue resulting from a decision, any business decision is profitable if:…
In case Sharon were risk-averse, she would pick Investment X because it has the maximum yield and the minimum risk. “The attitude toward risk in which an increased return would be required for an increase in risk” (Gitman, 2006, p. 230).…
7. Which of the following would not normally be a reason for a bond swap?…
3. In a multi-factor APT model, the coefficients on the macro factors are often called ______.…
3) An insurance company estimates its objective risk for 10,000 exposures to be 10 percent. Assuming the probability of loss remains the same, what would happen to the objective risk if the number of exposures were to increase to 1 million?…
__________ assets generate net income to the economy and __________ assets define allocation of income among investors.…
Risk Premium - risky investments must provide an investor with the potential for larger returns to warrant the risks of the investment.…