Investments can be diversified away under right conditions

Assignment Help Financial Management

Reference no: EM131893896

1. The current risk-free rate of return is 3.5% and the market risk premium is 4%. If the beta coefficient associated with a firm’s stock is 1.7, what is the stock’s required rate of return?

4.0%

5.6%

8.1%

10.3%

13.0%

2. Which type of risk that is associated with investments can be diversified away under the right conditions?

Systematic risk

Market risk

Inflation risk

Idiosyncratic risk

More than one of these risks can be diversified away.

Reference no: EM131893896

Questions Cloud

True regarding probability distributions : Which of the following is true regarding probability distributions?

What you have done to keep ed away so you could reconfigure : Now it's your turn to think outside of the box. What would you have done to keep Ed away so you could reconfigure the network?

Calculate the betas of stock x and y : Calculate the betas of stock X and Y? Also calculate the beta of the market?

Forecast the firm additional funds needed : In your internship with Lewis, Lee, & Taylor Inc. you have been asked to forecast the firm's additional funds needed (AFN) for next year.

Investments can be diversified away under right conditions : Which type of risk that is associated with investments can be diversified away under the right conditions?

What is the project payback period : Worthington Inc. is considering a project that has the following cash flow data. What is the project's payback period?

Write a one-page memo to marathon about the pros of approach : Read the following Case Study and answer the questions at the end in paragraph form. Write a one-page memo to Marathon about the pros and cons of this approach.

Develop problem-solving skills that generate idea creation : Develop problem-solving skills that generate idea creation, and apply them to everyday personal and professional experience.

Calculate an asset standard deviation based : Calculate an asset’s standard deviation based on the following observed sample of returns: -5%, 3%, 8%, 10%, 15%.

User Account

All Pages