--%>
Assignment Help - homework help

Explain non diversifiable risk and how is it measured

Explain non diversifiable risk? How is it measured?

Unless the returns of one-half the assets into a portfolio are entirely negatively correlated along with the other half-that is extremely unlikely-some risk will remain after assets are combined in a portfolio. The degree of risk which remains is non diversifiable risk, the part of portfolio's entire risk which can't be eliminated by diversifying.

Non diversifiable risk is measured by a term termed beta (β). The final group of diversified assets, the market, contain a beta of 1.0. The betas of portfolios, and individual assets, relate their returns to those of the total stock market. Portfolios along with betas higher than 1.0 are relatively more risky in compare of the market. Portfolios along with betas less than 1.0 are relatively less risky than the market. (Risk-free portfolios have a beta of zero.)

 

   Related Questions in Finance Basics

  • Q : Are there security and soundness

    Are there security & soundness implications of mergers?No. All mergers needs regulatory approval and are subject to intense examination through regulators. If anything, the influence on safety and soundness is in general positive, as mergers

    		•
  • Q : Sensitivity analysis report ABC Company

    ABC Company manufactures three types of products and has provided you with the following linear problem: Max Z=15X1+20X2+14X3 (Total profit)s.t.5X1+6X2+4X3<=210 (Total labor hours available)10X1+8X2+5X3<=200

    		•
  • Q : What are Feeder Funds Feeder Funds :

    Feeder Funds: For lawful basis accounting purposes, funds into which some taxes or fees are deposited on collection. In some situations administrative costs, collection expenses, and refunds are paid. The balance of such funds is transferable at any t

    		•
  • Q : Compare and contrast the potential

    Normal 0 false false

  • Q : Governments fiscal policy options for

    Normal 0 false false

  • Q : Define General Fund General Fund (GF):

    General Fund (GF): For lawful basis accounting and budgeting aims, the predominant fund for the financing state government programs, employed to account for revenues that are not particularly designated to be accounted for by another fund. The main so

    		•
  • Q : Describe the terminal value calculation

    Describe the terminal value calculation at the ending of the forecast period. Why is it crucial? The firm which business operation is being valued is not accepted to suddenly cease operating at the ending of the discrete forecasting period, how

    		•
  • Q : State Section 8.50 Section 8.50 : The

    Section 8.50: The Control Section of Budget Act gives the authority to raise federal funds expenses authority.

    		•
  • Q : Describe the status of cyclically

    Assume the full-employment, non-inflationary level of real output is GDP3 (not GDP2). If the economy is operating at GDP2 instead of GDP3, describe the status of its cyclically adjusted budget? The status of its present fiscal polic

    		•
  • Q : Define Governors Budget Governor's

    Governor's Budget: The publication the Governor represents to the Legislature, by January 10 every year. It has recommendations and approximates for the state’s financial operations for the budget year. This also displays the real revenues and e

    		•