Diversification can reduce A. systematic risk only B. unsystematic risk only C. both systematic and unsystematic D. Market risk

List which of the following statement(s) concerning risk are correct? 1. Nondiversifiable risk is measured by beta. II. The risk premium increases as diversifiable risk increases. III. Systematic risk is another name for nondiversifiable risk. IV. Diversifiable risks are market risks you cannot avoid.

The systematic risk principle states that the expected return on a risky asset depends only on which one of the following? Unsystematic risk Market risk Diversifiable risk

The desired rate of return on an investment should reflect the degree of risk involved. A.   True B.   False

What type of risk is the risk that belongs to the market as a whole?     Systematic risk     Unsystematic risk (or nonsystematic risk)     Total risk

CAPM accounts for a. Unsystematic risk b. Systematic risk c. Both Systematic and Unsystematic risk d. Unique risk

What does Jensen's alpha measure? a. An investor's reward in proportion to their assumption of systematic risk b. The abnormal return of an asset, defined as the degree to which its actual return exceeds that predicted by the capital asset pricing model c. The degree to which diversifiable risk is eliminated d. How much reward an investor is getting for each unit of risk assumed

This type of risk affects a large number of assets, each to a greater or lesser degree.   Group of answer choices systematic risk unsystematic risk idiosynchratic risk principle of diversification

Which of the following statements are true about systematic risk? Select one or more: a. Beta is a measure of systematic risk in ALL asset pricing models b. Systematic risk can be fully eliminated by diversification С. Systematic risk can be traded among financial entities but cannot be destroyed or eliminated d. All stocks must have the same exposure/factor loading on systematic risk e. Systematic risk is priced f. The premia on systematic risk must always be higher than the risk-free rate Which statements are true of optimization? Select one or more: a. It is a general mathematical tool and can be used not only in portfolio optimization but many business problems b. When applied in real world setting we often use computers to estimate the optimum numerically rather than doing calculus by hand с. One of the earliest applications of optimization to business problems is Augustin Cournot's 1838 duopoly pricing model d. Optimization can only ever be as effective as the description of the…

According to the CAPM, which of the following risks is irrelevant?   Select one: a. Unsystematic risk   b. Systematic risk   c. All risks are always relevant   d. Market risk