Risk return tradeoff Study guides, Class notes & Summaries

RMI 2302 Exam 2 - FSU Dr. Nyce Questions and Answers Already Passed Who uses decision making ? Individuals Organizations Government Individuals use expected ____ Utility Organizations use expected ____ Value What entity is able to take on risk regardless of the reward Gov't What is one of the big problems we have with modeling how decisions are made? Decisions are made is that they do not explicitly account for biases on the part of the decision maker What is Bias? an incl...

What advantage do multi-factor models have over single-factor models, such as the Capital Asset Pricing Model? - ANSWER-Multi-factor models tend to explain systematic returns much better than do single-factor models. By doing so, multi-factor models are generally believed to produce better estimates of idiosyncratic returns. List the three major categories of factors that drive asset returns. - ANSWER-Macroeconomic factors, fundamental/style/investment/dynamic factors, and statistical factors...

top-down approach - Answer-A method of analyzing securities that starts with the overall market and narrows down to the specific company Treynor measure - Answer-A measure of reward to nondiversifiable volatility (systematic rISK) Unemployment Rate - Answer-A measurement of the percentage of the U.S. labor force that currently is not working but is willing and able to work and is actively seeking employment Value Investing - Answer-Investing in stocks that are considered underpriced given t...

Test Bank For Foundations of Finance, 10TH Edition By Keown/Martin/Petty. Within the financial markets, explain what we mean by "private placements" and name the advantages and disadvantages. Answer: Private placements are an alternative to the sale of securities to the public or to a restricted group of investors through a privileged subscription. Any type of security can be privately placed (directly placed). The major investors in private placements are large financial institutions. Bas...

What advantage do multi-factor models have over single-factor models, such as the Capital Asset Pricing Model? - ANSWER-Multi-factor models tend to explain systematic returns much better than do single-factor models. By doing so, multi-factor models are generally believed to produce better estimates of idiosyncratic returns. List the three major categories of factors that drive asset returns. - ANSWER-Macroeconomic factors, fundamental/style/investment/dynamic factors, and statistical factors...

CAIA Level II Questions and Answers Latest Updated 2024 What advantage do multi-factor models have over single-factor models, such as the Capital Asset Pricing Model? Multi-factor models tend to explain systematic returns much better than do single-factor models. By doing so, multi-factor models are generally believed to produce better estimates of idiosyncratic returns. List the three major categories of factors that drive asset returns. Macroeconomic factors, fundamental/style/invest...

CAIA Level II Questions and Answers 100% Accurate What advantage do multi-factor models have over single-factor models, such as the Capital Asset Pricing Model? Multi-factor models tend to explain systematic returns much better than do single-factor models. By doing so, multi-factor models are generally believed to produce better estimates of idiosyncratic returns. List the three major categories of factors that drive asset returns. Macroeconomic factors, fundamental/style/investment/d...

CFA Level 3 Exam 204 Questions with Answers 2023 bounded rationality - CORRECT ANSWER individuals act as rationally as possible but are constrained by a lack of knowledge and cognitive ability satisfice - CORRECT ANSWER making a reasonable but not necessarily optimal decision the price is right - CORRECT ANSWER asset prices reflect and instantly adjust to all available information weak-form efficiency - CORRECT ANSWER prices inncoporate all past price and volume data semi-strong...

FIR 4440 FINAL EXAM Questions with 100% Correct Answers | Verified | Updated An investment's return usually has two components, one of which is ___________ which reflects the cash you receive directly while you own the investment. a. the capital gain b. the income component c. your reward for bearing risk d. your total dollar return e. your gross return on that investment - answerb. the income component Over the past 70 years, which of the following investments has provided the smalles...

FNAN 307 Test 1 ULL Who uses financial statements and in what capacity or manner? - Management- Minimize cost of capitol, maximize shareholder's wealth What is the purpose of financial reporting? - For management to minimize the cost of capitol and maximize wealth of the firm Why should a firm use some debt with interest costs in its capital structure? - Lower cost in equity b/c tax deductions, Risk-return tradeoff Magnifies earnings Describe the adversarial nature of financia...