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26 Nov 2019

The beta coefficient is a measure of a stock’s _______ risk.
idiosyncratic
market
firm-specific
default
total

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Elin Hessel
Elin HesselLv2
9 Mar 2019
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Related questions

13) The geometric average return is _____ than the arithmetic average return for a given set of returns.

14) A group of assets held together by an investor is referred to as a __________.

15) Unsystematic risk can also be referred to as asset-specific risk, ________ risk, idiosyncratic risk, or unique risk.

16) ________ refers to the practice of investing in a variety of diverse assets as a means of reducing risk.

17) An unexpected increase in the variable costs for a firm is an example of _____________ risk.

18) An unexpected decrease in corporate tax rates is an example of __________ risk.

19) If a risky security has more risk than the overall market, its beta coefficient is _______ 1.

20) All else constant, an increase in the market value of preferred stock will affect a firm's weighted average cost of capital by changing the ______ of preferred stock.

Consider the following information:

stock beta standart Deviation
Stock A 1.03 21%
Stock B 1.24 21%

a) which security has more total risk? Why?

b) which security has more unsystematic (idiosyncratic orresidual) risk? why?

c) which security should have the higher expected return?why?

d) given that risk-free rate is 4.2% and market average returnis 15.7%, please compute the expected return for each stock?

Which type of risk that is associated with investments can be diversified away under the right conditions?

Systematic risk
Market risk
Inflation risk
Idiosyncratic risk
More than one of these risks can be diversified away.

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