oo OO Verizon 7:11 PM ct-ecsu com T 59% The following information is for the nex
ID: 3012726 • Letter: O
Question
oo OO Verizon 7:11 PM ct-ecsu com T 59% The following information is for the next three questions. An investor obtains the following probability distributions for two stocks: State Pi Rx RY 30% 10% 40% 4096 10% -20% 30% 30 30% What are the expected returns for the Security X and for Security Y? 10.0%: 11.3% 9.5% 13.0% 10.0%: 95% 100%: 130% OE 130%100% What are the standard deviations of these two stocks? 16.8% 30.5% 10.22%, 12.5% 13.33% 18.88% 23.5% 129% What are the CVs for these two securities? OA 1.54 209 1.54.272 1.18.2.72 162.209Explanation / Answer
Q7) D is the right answer to the question.
Undiversifiable - Also known as "systematic" or "market risk," undiversifiable risk is associated with every company. Causes are things like inflation rates, exchange rates, political instability, war and interest rates. This type of risk is not specific to a particular company or industry, and it cannot be eliminated or reduced through diversification; it is just a risk that investors must accept.
Diversifiable - This risk is also known as "unsystematic risk," and it is specific to a company, industry, market, economy or country; it can be reduced through diversification. The most common sources of unsystematic risk are business risk and financial risk. Thus, the aim is to invest in various assets so that they will not all be affected the same way by market events.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.