CHAPTER 8 RISK AND RATES OF RETURN QUESTIONS WITH CORRECT ANSWERS

CHAPTER8 RISKAND RATES OF b b b b b




RETURNQUESTIONSWITHCORRECT b b b




ANSWERS 2025
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The chance that some unfavorable event will occur. - correct answer-Risk
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What are 2 investor attitudes towards risk? - correct answer-1. riskKaversion
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2. Risk Premium
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assumes investor dislike risk and require higher rates of return to encourage them to hold riskier securiti es. -
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correct answer-Risk Aversion
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the difference between the return on a risky asset and a risk-
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less asset, which serves as compensation for investors to hold riskier securities. - correct answer- Risk
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Premium
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How do you calculate return? - correct answer-ending value-cost/cost
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The riskiness of an asset is based on what? - correct answer-The riskiness of the cash flows
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What are the 2 ways an assets risk can be analyzed? - correct answer-1. Stand Alone
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2. AKPortfolio Context
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analyzing an asset's cash flows by themselves. - correct answer-Stand Alone
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combining the cash flows from differentKassets. - correct answer-Portfolio
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What are the ways you can quantify the stand alone risk? - correct answer- Standard
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deviation and coefficient of variation
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