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Does beta measure nondiversifiable risk?
Yes, beta measures the sensitivity of an asset's returns to market movements, representing the nondiversifiable risk (systematic risk) of an investment. A beta of 1 indicates that the asset moves in line with the market, while a beta greater than 1 implies higher volatility, and a beta less than 1 indicates less volatility than the market.
What should you invest 100 dollars in?
It depends on your risk appetite.If you are high risk investor invest in the stock marketIf you are a medium risk investor invest $50 in the stock market and $50 in bank CDsIf you are a low risk investor invest in bank CDs
Discuss the relationship between investor protection and corporate risk-taking?
no relationship
Why should an investor in secondary bond market?
As with any investment, an investor should invest in the secondary bond market if (s)he believes that the return obtainable through such an investment is worth the probability-factored risk of securing the investment.
What factors should an investor consider when making an investment?
When making an investment, an investor should consider factors such as the potential return on investment, the level of risk involved, the investment timeframe, the current market conditions, the investor's financial goals and risk tolerance, and the reputation and track record of the investment opportunity.
What is the definition of market risk reduction?
Market risk reduction is the aggregate effort of an investor towards diminishing the possibility of suffering a loss due to factors that affect the market as a whole. Examples of factors that pose market risks are natural calamities and political insecurity in a country.
Distingush between systematic and unsystematic risks which is often regarded as the only relevant risk and why?
It is the risk which is due to the factors which are beyond the control of the people working in the market and that's why risk free rate of return in used to just compensate this type of risk in market. This is the risk other than systematic risk and which is due to the factors which are controllable by the people working in market and market risk premium is used to compensate this type of risk. Total Risk = Systematic risk + Unsystematic Risk As systematic risk is beyond the control of people working in market that;s why it is defenately not the relevent risk because anything not controllable is irrelevant and that's why unsystematic risk is the relevant risk because it is in the control of investor to in which security to invest or not.
What are the main assumptions about the prevailing investor risk perception in finance It this pattern easily confirmed in the market What are the reasons for this deviation if any?
Looks like a Gradschool question
Does a high risk adverse investor choose a risk fre investment?
You cannot be adverse to risk, but you can be averse to it.
Which investor incurs the greatest risk?
preferred stockholder
Difference between eqity fund and mutual fund?
Equity is the owners fund and mutual fund is pool money from the investor and invest in securities market. mutual fund has low risk an depends upon market condition.
What is the premium added as a compensation for the risk that an investor will not get paid in full?
maturity risk premium
