--%>
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 : Describe the role of a broker in

    Describe the role of a broker within security transactions? How are brokers compensated?Brokers handle orders to purchase or sell securities. Brokers are agents who work in support of an investor. While investors call with an order, brokers work

    		•
  • Q : Explain Planning Estimate Planning

    Planning Estimate (PE): A document employed to record and monitors those present and budget year expenditure adjustments comprising budget change proposals accepted for inclusion in the Governor's Budget. PEs is broken down by department, character, f

    		•
  • Q : Describe Schedule 10R Schedule 10R

    Schedule 10R (Supplementary Schedule of Revenues and Transfers): The Department of Finance control document replicating information for transfers, revenues, and inter-fund loans for the past, present, and budget years. Schedule 10Rs i

    		•
  • Q : Define Claim Schedule Claim Schedule :

    Claim Schedule: It is a request from a state department to the State Controller's Office to distribute payment from a legal appropriation or account for a legal state obligation. The claim agenda recognizes the appropriation or account to be charged,

    		•
  • Q : State Schedule 11 Schedule 11 : It is

    Schedule 11: It is the outdated word for “Supplementary Schedule of Operating Expenses and Equipment.”

    		•
  • Q : Lower for a specified company-the cost

    Normal 0 false false

  • Q : Distinguish among refinancing debt and

    Normal 0 false false

  • Q : Seasonal variations and secular trends

    Normal 0 false false

    		•
  • Q : Describe the financial leverage effect

    Describe the financial leverage effect and what causes it? Explain the potential benefits and negative consequences of high financial leverage? Financial leverage is the additional volatility of overall income caused through the presence of fix

    		•
  • Q : Fin 235 Personal Finance Homework Fin

    Fin 235 Personal Finance Homework Chapter 8: Problems: 1, 3, 5, 7 1.   Most home insurance policies cover jewelry for $1,000 and silverware for $2,500 unless items are covered with additional insurance. If a family

    		•