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Is it correct that Sensitivity is the an absolute measure of risk?
Wiki User
∙ 10y ago
Sensitivity is the an absolute measure of risk
Wiki User
∙ 10y ago
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Difference in Relative risk and risk ratio?
There is no difference between the two. Relative risk is the same as relative ratio. Commonly abbreviated as RR, relative risk/ratio is measure of absolute risk in one population as a proportion of absolute risk in another. It is a measure of the strength of association.
How should the measure of risk of an asset be interpreted?
Risk is necessary in the investment world. The absolute measure of risk is the standard deviation which is a statistical measure of dispersion. The distribution curve shows how much an asset can deviate from its expected outcome.
What is relative risk and how is it calculated?
Relative risk (RR) is the measure of absolute risk in one population as a proportion of absolute risk in another. It a measurement of the strength of association.It is calculated as follows:Incidence among exposed / Incidence among unexposed; ORa/(a+b) OVER c/(c+d)The higher risk is usually (but not always) the numeratorRR cannot be calculated for case-control studiesRR is not influenced by the magnitude of background risk
How do you calculate absolute risk?
=incidence
Is the coefficient of variation a better measure of risk than the standard deviation if the expected returns of the securities being compared differ significantly?
The Standard deviation is an absolute measure of risk while the coefficent of variation is a relative measure. The coefficent is more useful when using it in terms of more than one investment. The reason being that they have different returns on average which means the standard deviation may understate the actual risk or overstate depending.
Does standard deviation measure systematic or unsystematic risk?
Standard deviation is a measure of total risk, or both systematic and unsystematic risk. Unsystematic risk can be diversified away, systematic risk cannot and is measured as Beta.
What are the risks of britesmile?
If you get your teeth whitened you are risking losing some sensitivity in your teeth. It is also a risk if you are pregnant.
What information does beta give to a financial manager?
Beta is also referred to as financial elasticity or correlated relative volatility, and can be referred to as a measure of the asset's sensitivity of the asset's returns to market returns, its non-diversifiable risk, its systematic risk or market risk. On an individual asset level, measuring beta can give clues to volatility and liquidity in the marketplace. On a portfolio level, measuring beta is thought to separate a manager's skill from his or her willingness to take risk.
How do you measure risk within a firm?
You can measure risk by calculating the risk associated with each project the company decides to take on. A company will generally balance their risks with their expected returns.
What is the sensitivity approach to dealing with project risk?
Please read page 61 of Financial Management course notes of KSOU
Which of the following is the most relevant measure of risk for capital budgeting purposes?
Market risk is theoretically the most relevant measure of risk for capital budgeting purposes because it is reflected in stock prices.
The correct guiding principle of composite risk management?
Accept some unnecessary risk
