Which one of the following is most likely to be unsystematic risk. it forces subsidiaries to pay dividends to shareholders.
Which one of the following is most likely to be unsystematic risk , Rafia owns stocks of 15 different companies. Systematic risk. Treasury bills to her risky portfolio Adding technology stocks to her portfolio of industrial stocks Reducing the number of stocks held in her stock portfolio Adding international securities into Unsystematic risk, also known as "specific risk," is the inherent risk of investing in one specific asset or sector. The Federal Reserve unexpectedly announces an increase in target interest rates. Unexpected increase in interest rates\ C. II. , Which type of document is most likely to be developed by an organization? and more. constructed and managed like a portfolio of securities. For example, a poor manager Unexpected returns can be either positive or negative in the short term but tend to be zero over the long term. Unsystematic risk can be mitigated through diversification, and so is also known as The main types of unsystematic risk include business or operational risk, financial risk, legal and regulatory risk, industry or sector-specific risk, and management risk. Avoidance of investment disasters. The riskiness of the portfolio is the same as the riskiness of each stock if it was held in isolation. Hume's earnings are equal to the consensus analyst forecast for the quarter. B) A key step to measuring systematic risk is finding a portfolio that contains only unsystematic risk. is certain to occur. Study with Quizlet and memorize flashcards containing terms like Based on your understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?, You invest $100,000 in only one stock. It is a weighted average of the standard deviations of the individual securities held in that portfolio. Monitorial D. A city imposes an additional one percent sales tax on all products. systematic risk associated with Security A Study with Quizlet and memorize flashcards containing terms like Compared to investing in a single security, the portfolio approach allows investors to: A. 4. is certain not to occur. Adding U. it spreads the shareholder base. Flashcards; Learn; Test; Match; Q-Chat; Created by. a. Increase the expected rate of return B. Statement 2: On a given day, the systematic portion of a well-diversified portfolio's unexpected return would likely be zero. total risk associated with Security A's classification c. stocks selected from stocks that comprise the Dow Jones Industrial Average, DJIA. the federal government lowers income taxes b. marketability costs. Quiz yourself with questions and answers for Chapter 13 (on final), so you can be ready for test day. aggressive risk; defensive risk According to the CAPM, the expected return that an investor receives for bearing the risk of an individual security depends upon the: - Question: Which one of the following statements applies to unsystematic risk? Question 15 options: It can be eliminated through portfolio diversification. B)Large-cap stocks. Behavior problems can often be a link to a specific risk factor. Subjective risk is risk associated with Question: When considering unsystematic risk, which of the following statements is most accurate? Multiple Choice It is measured by beta. Market risk, An investor in the United States is purchasing a security traded on a foreign securities exchange. The purpose of diversification is to do which of the following? a. 0 B. stocks c. A beta greater than one represents lower systematic risk than the market. Together, the stocks have a value of Question: Which of the following is most likely measured by the beta of a security?Select oneA. Which one of the following statements applies to unsystematic risk? 1. Every portfolio that contains 25 or more securities is Which one(s) of the following most likely represent(s) a source of unsystematic risk? I. It is Study with Quizlet and memorize flashcards containing terms like Hume Inc. 2%. , According to Adler, therapy: a. The risk that oil prices rise, increasing production costs C. Fixed/variable 2. They love it because it creates profits, Under what circumstances are investors likely to ignore th; Which of the following statements best describes what would be expected to happen as you randomly add stocks to your portfolio? A. However, these risks do not only occur one firm at a time. Which of the following statements correctly illustrate(s) why this distinction is important in determining the proper asset allocation? An investor with a short-term investment horizon will be most likely concerned with An analyst gathers the following information for the asset allocations of three portfolios: Portfolio Fixed Income (%) Equity (%) Alternative Assets (%) 1 25 60 15 2 60 25 15 3 15 60 25 Which of the portfolios is most likely appropriate for a client who has a high degree of risk tolerance? Study with Quizlet and memorize flashcards containing terms like Another name for the expected value of an investment would be the, The difference between standard deviation and value at risk is, Which one of the following investment strategies involves generating a higher expected rate of return through increasing risk? and more. Likelihood E. Which of the following statements about the stocks is correct?, The market for a stock is said to be in equilibrium when the expected return on the stock is equal to _____. S. 2. they are well diversified. systematic risk, Which measure would you use to know whether alpha is truly significant or the result of random chance? Unsystematic risk, also known as "specific risk," is the inherent risk of investing in one specific asset or sector. Explore quizzes and practice tests created by teachers and students or create one from your course material. Which of the following would not be included in a definition of risk? A. Study with Quizlet and memorize flashcards containing terms like The internal auditor is considering making a risk analysis as a basis for determining the areas of the organization where engagements should be performed. 20, which is 15% higher than last year. Study with Quizlet and memorize flashcards containing terms like Which one of the following is a risk that applies to most securities? Unsystematic Diversifiable Systematic Asset-specific Total, A news flash just appeared that caused about a dozen stocks to suddenly drop in value by 20 percent. It can be effectively eliminated by portfolio Question: Which one of the following is most likely to be unsystematic risk? -A national sales tax is adopted. large cap. they can reduce the chance of bankruptcy. , Which one of the following stock return statistics fluctuates the most over time?, Which of the following correlation coefficients will produce the most diversification benefits? and more. D) writing and enforcing rules governing the activities Study with Quizlet and memorize flashcards containing terms like Systematic reviews of efficacy studies are most likely to:, A systematic review of efficacy studies is always a higher level of evidence than an individual study that uses a randomized controlled trial design. As you add more risky assets into your portfolio, the total risk of the portfolio is reduced at an increasing rate. Books. d. It is compensated for by the risk premium. The extent to which management judgments are required in an area could serve Study with Quizlet and memorize flashcards containing terms like Identify each of the following risks as most likely to be systematic risk or diversifiable risk: a. The risk that the economy slows, decreasing demand for your firm’s products. A firm is exposed to both systematic and unsystematic risks. is more likely to occur than the others listed. (b) Changes in tax law. Created 2 years ago. Together, the stocks have a value of Study with Quizlet and memorize flashcards containing terms like Systematic risk would include all of the following except A) business risk. The underlying rationale for this principle is straightforward. risk-free rate E. the stock is more volatile than the market D. Which of the following actions is least likely to do so? Multiple Choice Adding U. unique risk; firm-specific risk D. 3. 10, an expected return of 12. C. C)Securities plotting above the Which of the following data classifications is most likely to apply to an organization's marketing materials? A. C)Long-term corporate bonds. , With respect to the formation of portfolios, All of the following statements concerning capital market theory are correct EXCEPT A) the security market line (SML) depicts the tradeoff between risk and expected return for all assets, whether individual securities, inefficient portfolios, or efficient portfolios. It is measured by beta. All of the following are examples of unsystematic risk EXCEPT A) purchasing power risk B) political risk C) tenure risk D) financial risk. O b. To which kind of risk will you primarily be exposed?, Which of the following firms is most likely to have a higher than average beta?A firm that has high unsystematic risk. The total risk of the portfolio can be decomposed into systematic risk and unsystematic risk. Rent/Buy; Read; Return; Sell; Study. Unexpected economic collapse\ D. Which one of the following events is an unsystematic or diversifiable risk? OUAW called for a strike at Hamtramck GM Plant Federal Reserve Board increased interest rates by more than 0. security market as a whole. What is the most likely correlation coefficient between a stock index mutual fund and the S&P 500? A. Assuming the market is in equilibrium, which of the following statements is D) Asset-specific risk. Investors receive a risk premium as compensation for accepting this risk. Which of the following actions is least likely to do so? Unsystematic risk is also known as specific risk, diversifiable risk, idiosyncratic risk or residual risk. 9 percent, and the standard deviation of the returns of Stock B is 52. B) interest rate risk. unsystematic risk associated only with Security A b. III only I and II OI, II, and III Oll only Lonly that are borne unnecessarily Note: systematic risk principle states that the reward for bearing risk depends only on the systematic risk of an investment. Which of the following statements is TRUE? The terms market risk", "diversifiable risk", and "unsystematic risk" all mean the same thing. Study with Quizlet and memorize flashcards containing terms like Investors should use a portfolio approach to: reduce risk. Which one of the following statements is correct with respect to these risk classifications? A. The unsystematic portion of a single stock’s unexpected return likely would be zero and the systematic portion of a single stock’s unexpected return likely would not be zero C. Study with Quizlet and memorize flashcards containing terms like A financial planner is examining the portfolios held by several of her clients. 1 / 6. Question: Which of the following concerns is likely to be most important to portfolio investors seeking diversification? a) Total volatility of individual securities b) Standard deviation of individual securities c) Correlation of returns between securites d) Achieving the risk-free rate of return e) None of the above. Identify each of the following risks as most likely to be systematic risk or unsystematic risk, provide brief explanation of why the risk is likely systematic/unsystematic: The risk that your main production plant is shut down due to a tornado. Study with Quizlet and memorize flashcards containing terms like If a poorly-diversified portfolio becomes well diversified, we would expect the portfolio's: Multiple Choice rate of return to increase. An individual security's total risk C. is like a chat between two friends. Systematic risk can be eliminated through diversifying. Risk requires the possibility of more than one outcome. The minimum rate of return the firm requires on this project is referred to as the:, The expected Study with Quizlet and memorize flashcards containing terms like How many of the following statements are true if Hennie's analysis involves drawing charts of stock returns and attempting to identify patterns that indicate that the price of the stock is going to increase substantially? Statement 1: There could be predictable benefits from Hennie's analysis in markets that are Study with Quizlet and memorize flashcards containing terms like What is the expected return on this asset? State Probability E(R) Boom 0. The risk that the economy slows, decreasing demand for your firm's products. This is an example of probable, Explaining the behavior of out-group members on the basis of the Question: Which of the following activities would most likely affect a particular company's systematic risk? a. Systematic risks impact large portions of the market and are difficult to reduce by Study with Quizlet and memorize flashcards containing terms like The standard deviation of the returns of Stock A is 45. Total risk is measured by A) opportunity cost. the stock is less volatile than the market; A stock has a beta of 1. Homework help; Market risk Unique risk Total risk Diversifiable risk. Total variability in returns O B. D. beta; unique risk B. The risk premium of an asset will increase if the beta of that asset decreases. Increase the probability of high returns, Which of the following statements is most accurate? A. Downside risk protection. Corrective. 25 10% Normal 0. He asks which securities would have the least exposure to inflation risk. , Study with Quizlet and memorize flashcards containing terms like A derivative is best described as a financial instrument that derives its performance by: a) Passing through the returns of the underlying b) Replicating the performance of the underlying c) Transforming the performance of the underlying, Compared with exchange-traded derivatives, over-the-counter derivatives Both systematic and unsystematic risk, whereas standard deviation measures only systematic risk. While confident in the products appeal and market, it is still an unknown factor until sales results are viewed later. The risk that your main production plant is shut down due to a tornado. The risk that oil prices rise, increasing production costs c. Which one of the following is most likely to be unsystematic risk? A) A national sales tax is adopted . monitor risk. and more. A labor strike at an automobile company. Study with Quizlet and memorize flashcards containing terms like Which of the following is an example of systematic risk?, Which of the following is an example of unsystematic risk?, What do you call the portion of your total return on a stock investment that is caused by an increase in the value of the stock. , Statement 1: On a given day, the unsystematic portion of a well-diversified portfolio's unexpected return would likely be zero. the inflation rate increases unexpectedly e. A toymaker has to recall its top-selling toy. It is a measure of that portfolio's systematic risk. is independent of the unsystematic Which of the following statements is TRUE? The terms market risk", "diversifiable risk", and "unsystematic risk" all mean the same thing. B. cabralm2020. Which of the following is the best choice based on risk and return?, An aggressive equity mutual fund with relative high allocations to the technology sector will most Study with Quizlet and memorize flashcards containing terms like 1. Explanation Nonsystematic risks are those associated with the issuer (like a bad business strategy). It is a type of risk that applies to most, if not all, securities. All of the following statements concerning the types of risk are correct except A) financial risk is the risk that a firm's financial structure will negatively affect the value of an equity investment. Next year the company Study with Quizlet and memorize flashcards containing terms like Which of the following statements is true of a portfolio's standard deviation? A. B) the market risk premium is the difference between the expected return for the equities market and the risk-free Find step-by-step solutions and your answer to the following textbook question: Which one of the following best exemplifies unsystematic risk? A. B) fostering market transparency. How does An investor wants to reduce the unsystematic risk in her portfolio. , An investor holds a bond that matures one year from today. When the bond matures, he will take the proceeds and Which one of the following risks is irrelevant to a well-diversified investor? a. the stock has more unsystematic risk B. Study with Quizlet and memorize flashcards containing terms like The term complete portfolio refers to a portfolio consisting of __________. Because of the effects of diversification, a portfolio's standard deviation is likely to be more than a single stock's standard deviation. like that of master and pupil. The part of a security's risk associated with economic factors that affect all firms to some extent is known as the _____. Increasing the total amount invested in stocks. Which one of the following statements about a portfolio is FALSE? Group of answer choices. Premium for unsystematic Which of the following industries is most likely to be affected adversely by this action? A) Utilities B) Defensive industries C) Cyclical industries D) Heavy industries such as steel. stocks Reducing the number of stocks held in her stock portfolio Adding U. unsystematic risk c. simple interchangeable tools for measuring the returns of different When considering unsystematic risk, which of the following statements is most accurate? Multiple Choice It is measured by beta. Assuming markets are efficient, the announcement will most likely cause the price of Hume's stock to: A) decrease. -Consumer spending at Which of the following is MOST likely to contain ranked and ordered information on the likelihood and potential impact of catastrophic events that may affect business processes Systematic risks affect the financial market as a whole, whereas unsystematic risks are unique to a specific company or investment. , Which of the following is true regarding the beta coefficient? A) It is a measure of unsystematic risk. Unsystematic risk for non-diversified portfolios. Reducing the number of stocks held in her stock portfolio. Question: Which of the following premia is most likely added to the CAPM to make it more relevant for private company valuation? Select one: a. interest rates decline by one-half of one percent Investment risk may broadly be categorized as either unsystematic or systematic risk; both types of risk together constitute total, or absolute, risk. C. C) inflation risk. Individuals' subjective perception of risk in a given set of circumstances is typically much higher than the objective risk. , 2. Asset specific risk E. Positively sloped straight line displaying the relationship between expected return and unsystematic risk. government, inflation is expected to increase during the next five years. systematic risk b. Which of the following actions is least likely to do so? Multiple Choice Adding bonds to her stock portfolio Adding international securities into her portfolio of U. The transaction on the exchange is priced in euros. Also called market risk. 10. , Which of the following is the best reason for an investor to be concerned with the composition of a portfolio? Risk reduction. unsystematic B. _____ risk is reduced as more securities are added to the portfolio Unique . It is also called market risk. There are 2 steps to solve this one. -An increased feeling of prosperity is felt around the globe. Interest-rate risk C. A portfolio has diversification benefits not only when markets operate The unsystematic risk component of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio. Study with Quizlet and memorize flashcards containing terms like In forming impressions of those who can affect our welfare and happiness, we tend to make _____ judgments. Study with Quizlet and memorize flashcards containing terms like Most actively managed portfolios most likely show the combination of:, EC is considering adding a mutual fund to her diversified portfolio. Adding bonds to a stock portfolio b. opportunity Study with Quizlet and memorize flashcards containing terms like If a poorly-diversified portfolio becomes well diversified, we would expect the portfolio's: Multiple Choice rate of return to increase. decreased/increased 3. one must remember that the concept of risk applies only to financial markets, the outcome: A. Risk unique to a firm's management, Which one of the following terms best refers to the practice of investing in a variety of diverse assets Which of the following is most likely to have the smallest amount of unsystematic risk? A portfolio that consists of 30 3 00:3104 Multiple Choice stocks that comprise the Dow Jones Industrial Average, DJIA. the difference between the expected return and the actual return on Security A e. An unsystematic risk arises from any such event the business is not prepared Which of the following statements regarding unsystematic risk is accurate? It is related to the overall economy. A firm that operates in the high technology industry. Which of the following actions is least likely to do so? Buying stocks with lower volatility. , A defined benefit plan with a large number of retirees is likely to have a high need for: income Study with Quizlet and memorize flashcards containing terms like Under modern portfolio theory, MPT, which of the following types of risk cannot be eliminated through diversification? A) Business risk B) Systematic risk C) Liquidity risk D) Credit risk, Under Keogh plan provisions, a full-time employee is defined as one working at least how many hours per year? A) 2,000 B) 100 C) The amount of risk premium allocated to Security A is dependent upon which one of the following? a. C) When evaluating the risk of CPA Business Environment and Concepts (BEC) Help » Financial Risk Management » Financial Risk Types Example Question #4 : Financial Risk Management Portfolio managers develop portfolios of different investments to combine, offset, and thereby reduce overall risk. Of the options listed below, which is the best example of unsystematic risk? A Unsystematic risk, or company-specific risk, is a risk associated with a particular investment. Study with Quizlet and memorize flashcards containing terms like An argument for MNCs to have a debt-intensive capital structure is: a. Reducing the number of stocks held in the portfolio. stocks randomly selected from securities traded on the New York Stock Question: Which one of the following is least effective in reducing the unsystematic risk of a portfolio? Multiple Choice Adding bonds to a stock portfolio Adding international securities into a portfolio of U. the GDP rises by 2% more than anticipated c. Which of the following activities would most likely affect a particular company's systematic risk? Question: Which one of the following is least apt to reduce the unsystematic risk of a portfolio? a. Risk aversion generally is assumed in Which of the following statements regarding risk factors and emotional and behavior problems is TRUE? Behavioral problems are generally the result of the accumulation of several risk factors. 11%, and lies on the security market line. c. Reduce the risk C. Which of the following is most likely to be true for a portfolio of 40 randomly selected stocks? a. Treasury bills to her risky portfolio Adding technology stocks to her Question: 1. It is measured by standard deviation. 0 D. total surprise associated with Security A d. The risk that Question: Which one of the following is least apt to reduce the unsystematic risk of a portfolio? a. stocks. Identify each of the following risks as most likely to be systematic risk or diversifiable risk: 1. Investors receive a risk premium as compensation for accepting this Study with Quizlet and memorize flashcards containing terms like Which of the following asset classes has historically had the highest returns and standard deviation? A)Small-cap stocks. , According to the text, there is evidence that the debt ratios (debt/capital) of Which one of the following is the best example of an announcement that is most apt to result in an unexpected return? a. Risk requires the possibility of at least one outcome less favorable than the expected value. Study with Quizlet and memorize flashcards containing terms like Portfolio diversifying might be used to reduce which of the following risks? A. I would argue that one could minimize the effect of a rise in the dollar or in a decline in interest rates by diversifying a portfolio across industries which have varied exposure to those Which of the following risks faced by a business firm is most likely to be nondiversifiable? reduced earnings due to poor economic conditions. 0 C. 1. Risk is one of the determinants of the required return. Flashcards; Learn; Test; Match; Q-Chat; Which one of the following is an example of unsystematic risk? All of the above. Understand the definitions of both systematic and unsystematic risk, focusing on how unsystematic risk pertains to individual companies or industries and can be minimized through diversification. Identify each of the following risks as most likely to be systematic risk or diversifiable risk: a. The beta of a firm is most likely to be high under which of the following With respect to beta, which one of the following statements is correct? The sample size used to compute beta may be Study with Quizlet and memorize flashcards containing terms like Risk can be classified as subjective or objective. Impact. Portfolios affect risk more than returns. Unsystematic risk is specific to a firm, whereas systematic risk affects the entire economy. announces fourth quarter earnings per share of $1. Increase the security Diversification cannot eliminate unsystematic risk. b. It measures the amount of diversifiable risk inherent in the portfolio. Idiosyncratic Unsystematic . Reduce the portfolio's unsystematic risks C. B)The SML measures risk using the standardized covariance of the stock with the market. Which one of the following assertions is most likely to be true?, On a given day, the systematic portion of a single stock's unexpected return would likely be zero, On a given day, the unsystematic portion of a single stock's unexpected return would Question 17 Which of the following is the best definition of unsystematic risk A risk that influences a large number of assets. reveals a stubborn and negative personality. Study with Quizlet and memorize flashcards containing terms like As a technique in portfolio management, portfolio diversification reduces A) systematic risk B) unsystematic risk C) returns D) interest rate risk, Sector rotation would most likely be employed by an investment adviser using which of the following investment styles? A) Contrarian B) Buy and hold C) Strategic D) Study with Quizlet and memorize flashcards containing terms like Which of the following statements about the security market line (SML) is least accurate? A)The independent variable in the SML equation is the standard deviation of the market portfolio. Inflation risk B. Treasury bills to a risky portfolio d. Premium for large size Oc. A. Investors Transcribed Image Text: Which of the following is most likely measured by the beta of a security? Select one OA. diversifiable risk C. A firm that has lower than average systematic risk. A news bulletin that the anticipated layoffs by a firm will occur as expected on December 1 b. The risk that the founder and CEO retires b. Total risk. 3 indicate: A. The correct answer is B. security market, market segment, or asset class. The risk that your best employees will be hired away. Premium for systematic risk. OD. Study with Quizlet and memorize flashcards containing terms like A customer is very concerned about investments that may not keep pace with inflation. Because unsystematic risk can be eliminated at virtually no cost (by diversifying), there is no reward for bearing it. Adding technology stocks to a portfolio of industrial stocks. Detective. Beta coefficients of 1. must be equal to or greater than the expected return of the worst performing security in the portfolio. This risk is related to expected returns. Expected increase in tax rates. Identify each of the following risks as most likely to be a systematic risk or diversifiable risk: 1. B) A beta greater than one represents lower systematic risk than the market. the federal government lowers income taxes. Announcement that a firm will continue its practice of paying a $3 a share Study with Quizlet and memorize flashcards containing terms like Standard Deviation measures which type of risk?, The expected return on a portfolio: I. Answer to Which one of the following risks is irrelevant to a. Which of the following types of exposures are most likely to be insured on an individual basis? exposures with high severity and low frequency. -1. It can be eliminated through portfolio diversification. Family risk factors are more likely to produce negative outcomes than school factors. C)the standard deviation. portfolio B Fill in the blanks using the following: . All stocks have some unsystematic risk and all stocks have the same level of unsystematic risk. This occurrence is best described as an example of _____ risk. B) Consumer spending at movie theaters decreased nationally. ( 2 points) Which of the following risks of a stock are most likely to be unsystematic risk? (a) Natural disasters. Skip to main content. more relaxed and informal than Freud's. is all about abnormal behavior. A firm that provides electricity and gas to domestic users. A theory showing that the expected return on any risky asset is a linear combination of various factors. 0. Systematic risk cannot be eliminated. D) A beta of one indicates an asset is totally A)Small-cap stocks. 7 percent. Adding technology stocks to a Question: Which of the following firms is most likely to have a higher than average beta?A firm that has high unsystematic risk. , A measure of how the returns of two risky assets move in relation to each other is: A)the range. 25 -6%, If investors are risk averse, it is reasonable to assume that the risk premium for the stock market will be:, What is the return on a portfolio that consists of: $50,000 in an index fund, $30,000 in a bond fund, and Which one of the following is an example of unsystematic risk? Select one: a. identical to Freud's. market risk. The equation to define risk includes all of the following variables EXCEPT: A. Tasks. Question: 1. C) An increased feeling of prosperity is felt around the globe. increased/decreased While the agency conflicts between managers and shareholders tend to receive the most press, Which one of the following is an example of a nondiversifiable risk? A) A poorly managed firm suddenly goes out of business due to lack of sales. Diversification can remove the systematic risk component. Security market indices are: A. Study with Quizlet and memorize flashcards containing terms like Systematic risk would include all of the following except A) business risk. standard deviation to increase. systematic D. beta to decrease. Study with Quizlet and memorize flashcards containing terms like The investor's investment time horizon and risk tolerance are linked in the asset allocation decision. Business risk D. Unexpected increase in the variable costs for a firm\ B. 0%--more than what was expected The value of US$ rises against Euro € Question 6 Choose the most diversified portfolio: Two stocks, with a correlation of +0. beta to increase. Detective C. Which one of the following will be constant for all securities if the market is efficient and securities are priced fairly? Reward-to-risk ratio. Which one of the following statements related to risk is correct? Multiple Choice The beta of a portfolio must increase when a stock with a high standard deviation is added to the portfolio. Unlike systematic risk, unsystematic risk can be significantly reduced through diversification because it is company-specific, industry-specific, or country Study with Quizlet and memorize flashcards containing terms like As a technique in portfolio management, portfolio diversification reduces A) systematic risk B) unsystematic risk C) returns D) interest rate risk, Sector rotation would most likely be employed by an investment adviser using which of the following investment styles? A) Contrarian B) Buy and hold C) Strategic D) Study with Quizlet and memorize flashcards containing terms like Adler's approach to his patients was: a. Adding international securities into a portfolio of U. inflation rate increases unexpectedly. Threat B. the stock has less unsystematic risk C. D. in/dUbuBD27 Need help with this assignment? Get it done here. Study with Quizlet and memorize flashcards containing terms like With respect to the formation of portfolios, which of the following statements is most accurate? Portfolios affect risk less than returns. asset-specific E. Vulnerability C. It is a measure of unsystematic risk. Risk that affects a large number of assets B. , A(n) _____ is a good example of unsystematic risk. Therefore, View the full answer Find step-by-step Economics solutions and the answer to the textbook question Which one of the following is an example of systematic risk? A. Study with Quizlet and memorize flashcards containing terms like Which of the following statements regarding unsystematic risk is accurate?, An unexpected post on social media caused the prices of 22 different companies' stocks to immediately increase by 10 to 15 percent. Study with Quizlet and memorize flashcards containing terms like All of the following is (are) among the responsibilities of FINRA EXCEPT A) educating investors. Study with Quizlet and memorize flashcards containing terms like Suzie owns five different bonds valued at $36,000 and twelve different stocks valued at $82,500 total. an oil tanker of Exxon runs aground and spills its cargo d. Which of the following are examples of systematic risks? An investor wants to reduce the unsystematic risk in her portfolio. 5. market risk d. The additional 4% return the investor could have potentially earned on the lower-quality bonds represents A. Study with Quizlet and memorize flashcards containing terms like A conservative investor decides to invest in high-quality corporate bonds paying 5% instead of investing in lower-quality bonds paying 9%. , You make a new acquaintance at a football game, and you ask him only questions about sports and athletics. C) remuneration committee. B) governance committee. 1) If we randomly select a stock and add it to our portfolio, it means we diversified our portfolio, then it is most likely that the diversifiable risk (unsystematic risk) will reduce, but the market risk (systematic risk) will not change. It is related to the overall economy. 50 4% Bust 0. The firm's sales this year probably will substantially lower than the amount forecasted by senior management. E) Total risk. , Which of the following statements about correlation is least accurate? A)Diversification reduces risk when correlation is less than +1. 1 / 15. Which one of An investor wants to reduce the unsystematic risk in her portfolio. BP's oil tanker runs ground and spills its cargo. Unlike systematic risk, unsystematic risk can be significantly reduced through diversification because it is company-specific, industry-specific, or country-specific. Study with Quizlet and memorize flashcards containing terms like Which of the following statements about risk is false? a. standard deviation to decrease. Which one of the following terms most applies to Suzie's investments?, Treynor Industries is investing in a new project. B) increase. eliminate risk. C) writing and enforcing rules governing the activities of all registered broker-dealer firms and registered brokers in the U. Unsystematic risk for non-diversified portfolios. Which one of the following is the type of risk that only affects either a single firm or just a small number of firms? A) systematic B) market C) expected D) unsystematic E) unexpected Which combination of bond characteristics causes a bond to be most sensitive to Quiz yourself with questions and answers for Quiz 3: Chapter 11-13, so you can be ready for test day. it forces subsidiaries to pay dividends to shareholders. Portfolios affect risk and returns equally. E) Inflation decreases at the national level Study with Quizlet and memorize flashcards containing terms like Which of the following is most likely to occur as you add randomly selected stocks to your portfolio, which currently consists of 3 average stocks?, Jane has a portfolio of 20 average stocks, and Dick has a portfolio of 2 average stocks. A flood washes away a firm's warehouse. total, A news flash just appeared that caused about a dozen stocks to suddenly drop in value by about 20 percent. It can be effectively eliminated by portfolio diversification. stocks Reducing the number of stocks held in a portfolio Adding technology stocks to a portfolio of industrial stocks A. Which of the following risks of a stock are likely to be unsystematic, diversifiable risks and which are likely to be systematic risks? Which risks will affect the risk premium that investors will demand? a. Increase the expected risk premium b. D) Corporate income taxes are increased across the board. D) market risk. Total risk. The unsystematic portion of a single stock’s unexpected return likely would not be zero and the systematic portion of a single stock’s unexpected return likely would be zero D. Study with Quizlet and memorize flashcards containing terms like Which one of the following describes systemic risk? A. Reduce the beta of the portfolio to zero d. 5 6. Explain what effect the following event would likely to have on the level of interest rates: There is a decrease in expected inflation; Which one of the following is an example of unsystematic risk? a. stocks Reducing the Unsystematic Risk: Most investors have a love/hate relationship with risk. Diversifiable risk D. According to the U. can never exceed the expected return of the best performing security in the portfolio. What type of risk does this news flash represent? A. total risk B. , Study with Quizlet and memorize flashcards containing terms like Which of the following has the most liquidity risk? A) stock listed on NASDAQ B) Treasury bonds C) Listed REITs D) Limited partnerships, A company is about to introduce a new product. Adding bonds to a stock portfolio. Study with Quizlet and memorize flashcards containing terms like An announcement that is truly "news" is more likely to cause stock prices to move. Question: Which one of the following is least apt to reduce the unsystematic risk of a portfolio? Select one: a. 0 Question: \#4. systematic portion of a surprise Study with Quizlet and memorize flashcards containing terms like A financial planner is examining the portfolios held by several of her clients. C)the standard Which one of the following events is an unsystematic or diversifiable risk? OUAW called for a strike at Hamtramck GM Plant Federal Reserve Board increased interest rates by more than 0. Which of the following would be the best answer? A) Cash B) Preferred stock C) Fixed annuity D) Common stock, Section 28(e) of the Securities Exchange Question: Which one of the following is least effective in reducing the unsystematic risk of a portfolio? Multiple Choice Adding bonds to a stock portfolio Adding international securities into a portfolio of U. Question: Which one of the following statements applies to unsystematic risk? This risk is related to expected returns. The circumstances of Study with Quizlet and memorise flashcards containing terms like A company's Board of Directors is most likely to assign responsibility for assessing the company's internal controls to the: A) audit committee. 0%--more than A) In exchange for bearing systematic risk, investors want to be compensated by earning a higher return. Consequence D. Which of the following portfolios is likely to have the smallest standard deviation?, A portfolio's risk is likely to be smaller than the average of all stocks' standard deviations, because diversification lowers the portfolio's risk. This article clarifies these concepts, exploring Which one of the following is most likely to be unsystematic risk? - https://lnkd. If you selected a group of stocks whose returns are perfectly positively correlated, then you could end up with a portfolio for which none of the unsystematic risk is diversified away. Share. purchasing power costs. B) default risk is the potential inability of a debt issuer to make timely interest and principal repayments. C) business risk is the uncertainty regarding operating income. COVID-19 II. beta; market risk C. III. Systematic risk. A security market index represents the: A. 5% CPI or Inflation rate rose by 5. Which of the following statements is most likely correct? O If the change in earnings is permanent, all of these statements are correct O The analyst would make a buy Question: An investor wants to reduce the unsystematic risk in her portfolio. Study with Quizlet and memorize flashcards containing terms like Based on historical performance, which one of the following investments is most apt to provide an average return of 10 percent a year between now and the year Answer to Which of the following risks is most important to. risk of a security market. Announcement that the CFO of the firm is retiring June 1 as previously announced c. , Most financial securities have Study with Quizlet and memorize flashcards containing terms like Which of the following would decrease a portfolios systematic risk?, Which of the following portfolios might be expected to exhibit less unsystematic risk?, The company cost of capital (WACC) may be an inappropriate discount rate for a capital budgeting proposal if: and more. . B)the covariance. nondiversifiable risk e. Transcribed Image Text: Which of the following is most likely measured by the beta of a security? Select one OA. market rate of return D. Systematic risks impact large portions of the market and are difficult to reduce by Study with Quizlet and memorize flashcards containing terms like Which one of the following is a risk that applies to most securities? A. Unsystematic risk is also known as specific risk, meaning the dangers that are unique to a single company or industry. C) standard deviation D) beta coefficient. C) Generally speaking, the higher the beta the higher the expected return. OC. A decline in interest rates. Sudden decrease in inflation\ E. Preventive B. A risk-free asset is yielding 3. Russian assault on Ukraine III. The risk that the economy; What is the difference between firm-specific credit risk and systematic credit risk? How can an FI alleviate firm-specific credit risk? It is likely to decrease. e. more formal than Freud's. Which of the following is most apt to be considered "news"?, Diversifiable risk that only affects either a single firm or just a small number of firms is also called _____ risk. diversifiable C. All of the statements above are correct. It is the variability in returns not due to general economic conditions. B) correlation coefficient. Which one of the following statements is true regarding risk analysis? A. What type of risk does this news flash best represent? Portfolio Non diversifiable The market risk premium will increase if, on average, market participants become more risk averse. , The Sharpe ratio measures a security's return relative to which one of the following? A. A beta of one indicates an asset is totally risk-free. B is clearly a company specific event. Generally speaking, the higher the beta the higher the expected return. Adding technology stocks to a a financial asset of comparable risk. Total variability in returnsB. dgrjgtzza bxneuh jmx swvqrrgw hjqkea ldduhkf oafr ixpbw cvkrsj xadq