About the idiosyncratic risk

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Reference no: EM132057699

1. "Idiosyncratic risk" has..

A. a positive mean given every future state.

B. a zero mean given every future state.

C. a negative mean given every future state.

D. an unpredictable mean given every future state.

2. Suppose a securities dealer sells a repo (repurchase agreement) to an investor. Which of the following is not true?

A. The investor could "flip" the repo by quicky selling it to another investor and then buying it back before it matures.

B. The repo is usually collateralized by government debt instruments.

C. The buyer (investor) might be purchasing the repo to reduce total portfolio risk.

D. The buyer (investor) and seller (securities dealer) cannot switch roles for a given repurchase agreement.

Reference no: EM132057699

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