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How would the risk of investing in a single stock compare with the risk of investing in a mutual fund?
If you are a serious investor you shouldn’t diversify. If you arent a stock riots investor you should diversify. A low cost index fund far outperforms most hedge funds and mutual funds over the long term. But volatility does not measure risk at all. Risk is measured by the actual risk of the business such as competitor.
What is financial risk management?
Financial Risk Management is a process of evaluating and managing current and possible financial risk at a firm as a method of decreasing the firm's exposure to the risk. Financial risk managers must identify the risk, evaluate all possible remedies, and then implement the steps necessary to alleviate the risk. These risks are typically remedied by using certain financial instruments as a method of counteracting possible ramifications. Financial risk management cannot prevent a firm from all possible risks because some are unexpected and cannot be addressed quickly enough.
What is the relationship between a firm's PE multiple and that firm's risk and growth potential?
all PE stands for is Price per share divided by Earnings per share at one point in time (it can change DAILY) - it has nothing to do with Risk or growth
What is the advantage of WACC?
All else equal, the weighted average cost of capital (WACC) of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk.
Discuss the relationship between financial and decision making and risk and return would all financial manageres view risk return tradeoffs similarly?
there is a direct relationship between financial decision making and risk and return. each financial decision made by the financial manager will have implication for the overall risk of the firm and its potential returns. All financial decisions are ultimately subjective in nature regardless of the amount of objective information collected as part of the decision making process. as a result, not all financial managers view risk return trade offs similarly. however it is expected they such decision making will be consistent with the goal of the investors that the financial manager represents. good luck......
How would the risk of investing in a single stock compare with the risk of investing in a mutual fund?
If you are a serious investor you shouldn’t diversify. If you arent a stock riots investor you should diversify. A low cost index fund far outperforms most hedge funds and mutual funds over the long term. But volatility does not measure risk at all. Risk is measured by the actual risk of the business such as competitor.
What is financial risk management?
Financial Risk Management is a process of evaluating and managing current and possible financial risk at a firm as a method of decreasing the firm's exposure to the risk. Financial risk managers must identify the risk, evaluate all possible remedies, and then implement the steps necessary to alleviate the risk. These risks are typically remedied by using certain financial instruments as a method of counteracting possible ramifications. Financial risk management cannot prevent a firm from all possible risks because some are unexpected and cannot be addressed quickly enough.
What is the relationship between a firm's PE multiple and that firm's risk and growth potential?
all PE stands for is Price per share divided by Earnings per share at one point in time (it can change DAILY) - it has nothing to do with Risk or growth
Suppose a firm estimates its cost of capital for the coming year to be 10 What are the reasonable cost of capital for an average risk project high risk and low risk?
In order to determine reasonable costs of capital for average, high and low risk projects the firm should develop risk-adjusted costs of capital for each category of risk based on the concept of divisional WACC. If a firm estimates that its cost of capital for the coming year will be 10%, the firm should use 10% as the basis for its average risk projects since the firm will need to achieve a minimum of a 10% return on all its projects. Typically, a high-risk project has the potential for higher returns and a low-risk project will typically yield lower returns. Therefore, the firm could set the cost of capital for its high-risk projects at 12% and the cost of capital for low risk projects at 8%. Since the average risk project has a 10% cost of capital, the overall risk of the firms projects will be equal to the 10% cost of capital. Similarly, if the firm's high-risk projects are particularly risky, they could be set at a 15% cost of capital and the low-risk projects will be adjusted down to a 5% cost of capital. The ultimate goal is that the portfolio of the firm's projects will achieve the required 10% return or greater so that the cost of capital to fund the projects is covered. The assignment of risk is somewhat subjective but it is better than not adjusting the risk at all.
What is a risk factor for cancer?
A risk factor is something that someone does, has or is that increases there chance of having a specific cancer. smoking, drinking, family history of a specific cancer, older age, obesity etc. are all risk factors of cancer
Why is it best to diversify?
Diversification reduces risks, although all risks cannot be diversified.
What is risk aggregation?
AGGREGATION OF RISKS There has been much discussion of the RAROC and VaR methodologies as an approach to capture total risk management. Yet, frequently, the risk decision is separated from risk analysis. If aggregate risk is to be controlled, this or a similar methodology needs to be integrated more broadly and more deeply into the banking firm. Both aggregate risk methodologies presume that the time dimensions of all risks can be viewed as equivalent. A trading risk is similar to a credit risk, for example. This appears problematic when market prices are not readily available for some assets and the time dimensions of different risks are dissimilar. Yet, thus far no one firm has tried to address this issue adequately.
Is there a legislated activity that you must do in relation to a specific hazard?
In most, but not all, jurisdictions, you must asses the risk of any specific hazard known to be in your workplace. Then you must use appropriate precautions and protections to control (reduce or eliminate) any excessive risk.
What is the difference between SML and CML?
Differences between CML and SML· Capital market line measures risk by standard deviation, or total risk· Security market line measures risk by beta to find the security's risk contribution to portfolio M· CML graphs only defines efficient portfolios· SML graphs efficient and nonefficient portfolios· CML eliminates diversifiable risk for portfolios· SML includes all portfolios that lie on or below the CML, but only as a part of M, and the relevant risk is the security's contribution to M's risk· Firm specific risk is irrelevant to each, but for different reasons
Will Google destroy us all?
Depends on how they diversify in the future. Some say the internet will become skynet.
How can infection risk be cintrolled in your workplace give specific examples in your answer?
Infection risk can be controlled in your workplace by ensuring that all the facilities are free from the garbage, debris, filth, and the potentially infectious materials.
What is to diversify?
It means to have many different types of investments (bassically don't put all your eggs in one basket)
