Answer the questions in below, if any calculation is needed please provide your

Question

Answer the questions in below, if any calculation is needed please provide your solution:

13. The percent of return that comes from stock market movements is measured by a)beta b)correlation c)standard deviation d)correlation squared

14. The risk measure in the Security Market Line equation is a)beta b)correlation c)standard deviation d)return

15. Standard deviation is an estimate of a) total risk b)unsystematic risk c)systematic risk d)the difference between the systematic and unsystematic risk

16. Beta is an estimate of a) total risk b)unsystematic risk c)systematic risk d)the difference between the systematic and unsystematic risk

17. An investor which increases the size of required return as risk increases is a) Risk avoider b) risk neutral c) risk lover

18. Reward the increases by a constant amount as risk increases is the risk attitude of Risk avoider b) risk neutral investor c) risk lover

19. Which correctly describes a risk lover. a) Reward for risk increases at an increasing rate as risk increases b) Reward for risk decreases at an increasing rate as risk increases c) Reward for risk increases at a constant rate as risk increases

20. For mild inflation the security market line: a) Shifts upward and parallel to the pre-inflation security market line b) Shifts downward and parallel to the pre-inflation security market line c) Rotates counter-clockwise from the pre-inflation security market line d) Rotates clockwise from the pre-inflation security market line

Explanation / Answer

13) CORRELATION SQUARED

IT IS A STATISTICAL MEASURE THAT REPRESENTS THE PERCENTAGE OF FUND OR SECURITY MOVEMENT THAT CAN BE EXPLAINED IN A BENCHMARK INDEX.

14) SECURITY MARKET LINE EQUATION

BETA IS THE SENSITIVITY OF INVESTMENT AND MEASURES THE RISK

15) TOTAL RISK

16)  BETA

BETA IS AN ESTIMATE OF SYSTEMATIC RISK.

17) RISK LOVER

RISK LOVER INVESTOR INCREASES THE SIZE OF REQUIRED RETURN AS RISK INCREASES.

18) RISK NEUTRAL

19) a) REWARD FOR RISK INCREASES AT AN INCREASING RATE AS RISK INCREASES

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