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How many diverse securities are required to eliminate the majority of the diversifiable risk from a portfolio?
recent research has found it would be 50 to 60 stocks .
Why there no reason to believe that the market will reward investor with additional return for assuming unsystematic risk?
There is no reason to believe that the market will reward investors for assuming unsystematic risk because this type of risk is specific to individual assets and can be diversified away. As investors build diversified portfolios, the unique risks associated with individual securities diminish, leading to the conclusion that only systematic risk, which affects the entire market, is compensated through higher expected returns. Therefore, the market does not provide an additional return for bearing risks that can be eliminated through diversification.
How are investors in zero coupon bonds compensated for making such an investment?
They are sold at discount and mature to face value over time.
What is the relevant portion of an assets risk attributable to market factors that affect all firms called?
a. Unsystematic riskb. Diversifiable riskc. Undiversifiable riskd. None of the aboveD. NONE OF THE ABOVE
Who are people that take financial risk to make profits?
investors
What is the difference between diversifiable risk and non-diversifiable risk?
Investment risk that can be reduced or eliminated by combining several diverse investments in a portfolio. Non-market (non-systemic) risks are diversifiable risks.
What is another term for market risk?
another term for market risk is non-diversifiable risk.
Strikes lawsuits regulatory actions and increased competition are all examples of?
diversifiable risk
What kind of investors are risk - seeking investors?
These are the investors who are ready to take a risk of losing their capital while making investors. You can consider stock market investors as risk seeking investors because there is no guarantee of our money in the stock market. There is always a risk of losing our capital in our stock market and hence it is a risky investment.
What is the difference between has the risk or takes the risk?
one has the word has in and one has the word takes in Diversifiable risk is the risk which can be mitigated by investing in different companies, different sectors, different assets and also different regions. Here we trying to minimize the risk of huge loss by taking the whole risk against one or few companies/ sectors / assets / regions. Non-Diversifiable risk can not be mitigated at all. This is the risk you are exposed to in individual investment. Every investment holds Market risk, i.e. uncertainity of market moving up or down and respective movement of your investment .
How many diverse securities are required to eliminate the majority of the diversifiable risk from a portfolio?
recent research has found it would be 50 to 60 stocks .
Why there no reason to believe that the market will reward investor with additional return for assuming unsystematic risk?
There is no reason to believe that the market will reward investors for assuming unsystematic risk because this type of risk is specific to individual assets and can be diversified away. As investors build diversified portfolios, the unique risks associated with individual securities diminish, leading to the conclusion that only systematic risk, which affects the entire market, is compensated through higher expected returns. Therefore, the market does not provide an additional return for bearing risks that can be eliminated through diversification.
How are investors in zero coupon bonds compensated for making such an investment?
They are sold at discount and mature to face value over time.
Is this a properly use of the word compensated Pregnant woman are also at risk due to their naturally compensated immune system?
More properly, "Pregnant women are also at risk due to their naturally compromised immune systems."When Wall Street workers open their bonus checks, they will appreciate being so nicely compensated.
What are different behavior types of investors?
Some common behavior types of investors include risk-averse, risk-tolerant, emotional, rational, short-term focused, and long-term oriented. Risk-averse investors typically avoid high-risk investments, while risk-tolerant investors are more open to taking risks. Emotional investors may make decisions based on feelings rather than facts, while rational investors are more likely to rely on data and analysis. Short-term focused investors seek quick profits, whereas long-term oriented investors are more interested in holding investments for extended periods.
What is the relevant portion of an assets risk attributable to market factors that affect all firms called?
a. Unsystematic riskb. Diversifiable riskc. Undiversifiable riskd. None of the aboveD. NONE OF THE ABOVE
What is risk premium?
Risk premium is the compensation investors expect to earn in return for taking risks.
