The non-diversifiable risk and ways to measure it
Explain in brief the non-diversifiable risk and ways to measure it?
Expert
Unless the returns of one-half of the assets in the portfolio are exactly negatively correlated with the other half of the assets which is almost impossible because some risk will be there even after assets are combined into a portfolio. The risk degree that cannot be removed by diversifying from the portfolio's total risk is known as non-diversifiable risk. Non-diversifiable risk is calculated using a term called beta. The ultimate grouping of diversified assets, the market has a 1.0 beta. The individual assets and betas of portfolios have the returns related to those of the overall stock market. a) Portfolios having beta values with higher than 1.0 are comparatively more risky than the market. b) Portfolios with betas less than 1.0 are relatively less risky than the market. c) Risk-free portfolios have a beta of zero.
Whereas you were visiting London, you purchased a Jaguar for £35,000, payable in three months. You have sufficient cash at your bank in New York City that pays 0.35% interest per month, compounding monthly, to pay for the car. At present, the spot exchan
Describe how the potential liability of owners of proprietorships, corporations and partnerships is different.
Explain asymptotic analysis in interest rate model.
What are the interest areas for financial managers when they go through pro forma financial statements?
Describe the long position in an options contract?An option is a contract giving the long the right to buy or sell a given quantity of an asset at a particular price at some time in the future, however not enforcing any obligation on him if the
What is Modern Portfolio Theory?
Society's interests can influence financial managers. Explain.
Define the stochastic differential equation with an expression?
A firm is evaluating two mutually exclusive projects that have unequal lives. Evaluate the projects using the equivalent annual annuity approach (EAA), recommend which project they should select. The firm's cost of capital has been determined to be 18 percent, and the projects have the following i
From books of Aggarwal Bors, following information has been extracted: Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax
18,76,764
1923692 Asked
3,689
Active Tutors
1419423
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!