Which of the following statements is true? A) Assets with lower levels of market

ID: 2658319 • Letter: W

Question

Which of the following statements is true?

A) Assets with lower levels of market risk will sell for higher prices.

B) Assets with lower levels of market risk will have higher expected rates of return.

C) Assets with higher levels of market risk will sell for higher prices.

D) Assets with higher levels of market risk will have lower expected rates of return.

A) Assets with lower levels of market risk will sell for higher prices.

B) Assets with lower levels of market risk will have higher expected rates of return.

C) Assets with higher levels of market risk will sell for higher prices.

D) Assets with higher levels of market risk will have lower expected rates of return.

Different asset classes have different cash flows streams and varying degrees of risk.

It would be well defined with CAPM(Capital Asset Pricing Model)

The main type of Market Risk are

1. Interest Rate Risk

2. Monetary Policy Risk

3. Commodity Risk

4. Currency Risk

As per CAPM model there will be a variable called as beta it defines the assets market risk

By CAPM model we can say in some cases

Assets with higher levels of market risk will sell for higher prices.

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