Systematic risk and not total risk is important

Assignment Help Financial Management

Reference no: EM131911744

1. We routinely assume that investors are risk-averse return-seekers; i.e., they like returns and dislike risk. If so, why do we contend that only systematic risk and not total risk is important?

2. A corporation has a stock price of $150 per share today. If it has a "5-for-4" stock split that is effective tomorrow, what would happen to the stock price?

a. It would rise to $180.

b. It would fall to $148.75

c. If would fall to $120.

d. It would rise to $187.50.

Reference no: EM131911744

Questions Cloud

What is the distinction between forecasting and planning : Is there a difference between forecasting demand and forecasting sales? Can demand be forecast from historical sales data?

Corporation is comparing two different capital structures : Rolston Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II).

Discuss some of the pros and cons of leasing : Discuss some of the pros and cons of leasing. Using particular real world examples.

What is credit default swap : What is Credit Default Swap? Provide an example, and explain why credit default swaps act like an insurance policy.

Systematic risk and not total risk is important : They like returns and dislike risk. If so, why do we contend that only systematic risk and not total risk is important?

Challenge relative to call option value-option pricing : Each student shall post information on article that discusses public corporation and financial manager's challenge relative to call option value, option pricing

Optimal level of leverage from tax-saving perspective : Define EBIT and discuss why the optimal level of leverage from a tax-saving perspective is the level at which interest equals EBIT

Performance evaluation of portfolio is difficult : Performance evaluation of a portfolio is difficult. What challenges can investment managers face.

Current rate be on three-year treasury securities : What should the current rate be on 3-year Treasury securities?

User Account

All Pages