finance

The risk premium of a security is determined by its __ risk and does not depend on its __ risk systematic, unsystematic
When investing for a long term, investors care about the volatility of ___ returns and not the volatility of __ returns cumulative, average
Many former employees at AlphaEnergy, an enerfy trading and supply company, had a large part of their portfolio invested in AlphaEnergy’s stock. These employees were bearing a high degree of ___ risk unsystematic risk
Which of the following is NOT a diversifiable risk?A) The risk that oil prices rise, increasing production costsB) the risk that the CEO is killed in a plane crashC) the risk of a key employee being hired away by a competitor D) the risk of a product liability lawsuit A) The risk that oil prices rise, increasing production costs
Which of the following is NOT a systematic risk?A) the risk that oil prices rise, increasing productionB) the risk that the economy slows, reducing demand for your firm’s productsC) the risk that your new product will not receive regulatory approvalD) the risk that the Federal Reserve rises interest rates C) the risk that your new product will not receive regulatory approval
Fluctuations of a stock’s return that are due to market-wide news representing common risk is the ___ systematic risk
The risk premium of a stock is NOT affected by its ___A) undiversifiable risk B) market risk C) systematic riskD) unsystematic risk D) unsystematic risk
Which of the following statements is FALSE?A) The risk premium of a security is determined by its systematic risk and does not depend on its diversifiable risk B) When we combine many stocks in a large portfolio, the firm-specific risks for each stock will average out and be diversifiedC) Fluctuations of a stock’s return that are due to firm-specific news are common risksD) The volatility in a large portfolio will decline until only the systematic risk remains C) Fluctuations of stocks’s returns that are due to firm-specific news are NOT common risks
Consider an economy with two types of firms , S and I. S firms always move together, but I firms move independently of each other. For both types of firms there is a 20% probability that they will have a 20% return and a 80% probability that they will have a -30% return. What is expected return for an individual firm? expected return=.2x(20%) + .8 x (-30%)= -20%
If the Federal Reserve were to change from an expansionary to a contractionary monetary policy, this would be an example of ____ systematic risk
Independent risk is more closely related to ____ unsystematic risk
The risk premium of a stock is not affected by its ___ unsystematic risk

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