How investors handle risk is an important topic that usually only economists observe.

Q: taxicab medal system. 7. True or False: The certainty equivalent of a risk averse person is smaller…

A: Transportation is fundamental capacity of marketing. Transportation gives the actual method for…

Q: How can we Include Risk in Investment Evaluation?

A: Risk is included in the investment evaluation  by using the following  methods like Beta, Standard…

Q: Why do economists say that people tend to be risk-averse?

A: Different individuals have different preferences towards risk or uncertainty. Most individuals are…

Q: systemic risk inhere mainly in the largest financial institution. true or false

A: systemic risk inhere mainly in the largest financial institution - False

Q: Why does the risk-adjusted discount rate reduce the investment's appeal?

A: Risk adjusted discount rate refers to the summation of risk free rat and the risk premium. Risk…

Q: Is common stocks or bonds best for a high risk firm? Why?

A: Stock: When corporates trades in equity securities, Stock market is the place where the investors…

Q: How does risk sharing benefit both financial intermediaries and private investors?

A: Risk-sharing - risk sharing is a method of sharing risk between the participants.

Q: How does diversification benefit against risk in your portfolio?

A:

Q: Define the term risk aversion?

A: The term Risk Aversion explains how people will react to a situation with an uncertain outcomes. It…

Q: What is the Risk-Adjusted Discount?

A: The risk adjusted discount is calculated by using the formula as follows:

Q: At what point in one’s life is it safest to try a risky investment?  Closer to or further from…

A: Its safest to try risky investment when you are further from retirement.

Q: Portfolios A, B, and C all lie on the efficient frontier that allows for risk-free borrowing and…

A: Given that Portfolios A, B, and C all lie on the efficient frontier that allows for risk-free…

Q: Evaluate the relationship between risk probability, risk impact and risk exposure.

A: In general, firms can calculate risk exposure using one of two methods: quantitative or qualitative.…

Q: Explain what is the risk premium?

A: A risk premium is the return in excess of the risk-free rate of return an investment is predicted to…

Q: Given two portfolios, one portfolio has a higher sharpe ratio than the other. Explain what this…

A: A portfolio with higher sharpe ratio is considered superior than the portfolio with lower sharpe…

Q: How can the Philippine Stock Exchange entice an average Filipino citizen to invest in securities?…

A: Savings and investments are important in the economy. For the economy to function smoothly, there is…

Q: Describe the difference between risk and uncertainty. Which one is more preferable and why?

A: Risk is the probability of winning or losing associated with an outcome. Chances of risk arise out…

Q: Give an example of a risk premium?

A: The expected risk-free rate of return on an investment is known as the risk premium. It is also the…

Q: Define the term Risk Analysis?

A: Risk analysis is the process to determine, identify, and analyzing risks associated with particular…

Q: Ever since the Covid-19 pandemic hit the economy the price of gold has been sky high .Today price…

A: An investment is an essential part of creating wealth as it adds more output to the economy and…

Q: Changes in the general economy, like changes in interest rates or tax laws, represent what type of…

A: There are a number of economic instruments to pick from whilst making an investment withinside the…

Q: What’s the difference between risk pooling and risk diversification?

A: Risk means probable ambiguity about the divergence from predicted profits or anticipated results. In…

Q: What are some of the weaknesses behind risk-based capital standards? Answer around 500 words.

A: Capital regulatory requirements are one of the ways to provide protection against bankruptcies.  The…

Q: You are thinking about purchasing an elegant shirt by mail. Shirts Galore offer an unlimited return…

A: Here Shirt Galore is offering an unlimited returns policy which means that no matter what the cost…

Q: Jagmit owns a 2009 sedan (auto). The last time Jagmit renewed his auto insurance, he decided to drop…

A: A policy where an entity or individual tends to receive reimbursement against losses from an…

Q: hat is covariance, and why is it important in portfolio theory

A: Covariance is used in finance to measure the two variable's degree of movement together relative to…

Q: What will happen if two assets are earning the same expected return, but one is more risky than the…

A: The uncertainty that may occur in the future is referred to as risk. The minimum profit you obtain…

Q: Define the term Aggregating Risk over time?

A: In financial terms, risk is defined as the chance that the actual gains from an outcome or…

Q: Discuss: i) diversifiable risk; ii) market risk; iii) systematic risk iv) unsystematic risk;

A: 1.  Diversifiаble  risk  is  the  роssibility  thаt  the  рriсe  оf  а  seсurity  will  сhаnge  due…

Q: What is the Risk-Adjusted Discount Rate Approach?

A: The rate of return is an important factor that determines whether the investment or project purpose…

Q: A risk-averse investor will: Answer a. Always accept a greater risk with a greater expected return…

A: Risk-averse describes investors who choose preservations of capital over the potential for a…

Q: (d) If the risk-free rate is higher, what would you expect the optimal risky portfolio to differ…

A: Introduction: The possible return on a risk-free investment is known as the risk-free rate of…

Q: Why are investors’ utility curves important in portfolio theory?

A: A portfolio is a a collection of financial assets and investment tools that are held by an…

Q: Investors have different preferences with regards to the risk: they can be risk averse, risk neutral…

A: The risk averse people are those person who always prefers lower risk among the different levels of…

Q: What will happen if two assets are earning the same expected return, but one is more risky than the…

A: There is a positive correlation between risk and return (a connection in which both variables move…

Q: Define the term risk premium?

A: Market Risk Premium: The amount that remains after deducting the risk-free rate of return from the…

Q: Describe the risk-adjusted discount-rate approach?

A: A person invests in a risky investment with the aim of earning higher returns as riskier the…

Q: Which of the following represent diversifiable risks? 1. the president of a company suddenly resigns…

A:

Q: How much liability does stockholder assume?

A: Shareholder: Any person, company, or organization holding stock in a specific company.

Q: As an investor, how do you diversify against risk?

A: Diversification means allocating funds to various financial instruments that have different risk…

Q: Required Return If the risk-free rate is 3 percent and the risk premium is 5 percent, what is the…

A: Required return can be calculated as follows: Required return=Risk free rate+Risk premium=3+5=8%

Q: Define the term Risk-Free-Interest Rate?

A: A risk-free interest rate is a rate of return on investment with the least risk or no risk. Since…

Q: Two restaurants are on the same block. One has been opened for 10 years and is a thriving business.…

A: The answer is as follows:-