Financial Management - Study Mode

[#836] Beta reflects stock risk for investors which is usually
Correct Answer

(A) individual

Explanation

Solution: Beta reflects stock risk for investors which is usually individual. The beta of an investment is a measure of the risk arising from exposure to general market movements as opposed to idiosyncratic factors.

[#837] For any or lower degree of risk, highest or any expected return are concepts use in
Correct Answer

(D) efficient portfolios

Explanation

Solution: For any or lower degree of risk, highest or any expected return are concepts use in efficient portfolios. An efficient portfolio, also known as an 'optimal portfolio', is one that provides that best expected return on a given level of risk, or alternatively, the minimum risk for a given expected return.

[#838] An unsystematic risk which can be eliminated but market risk is the
Correct Answer

(B) remaining risk

Explanation

Solution: An unsystematic risk which can be eliminated but market risk is the An unsystematic risk which can be eliminated but market risk is the remaining risk. Unsystematic risk is the risk that is inherent in a specific company or industry. By investing in a range of companies and industries, unsystematic risk can be drastically reduced through diversification.

[#839] An indication in a way that variance of y-variable is explained by x-variable which is shown as
Correct Answer

(A) degree of dispersion is one

Explanation

Solution: An indication in a way that variance of y-variable is explained by x-variable which is shown as degree of dispersion is one. The measure of dispersion helps us to study the variability of the items. In a statistical sense, dispersion has two meanings: first it measures the variation of the items among themselves, and second, it measures the variation around the average.

[#840] In regression of capital asset pricing model, an intercept of excess returns is classified as
Correct Answer

(C) Jensen's alpha

Explanation

Solution: In regression of capital asset pricing model, an intercept of excess returns is classified as Jensen's alpha. Jensen's Alpha, also known as the Jensen's Performance Index, is a measure of the excess returns earned by the portfolio compared to returns suggested by the CAPM model. It represents by the symbol α. The value of the excess return may be positive, negative, or zero.