1. The financial markets will pay investorts for acceptingsystematic risk but not for accepting unsystematic...

1. The financial markets will pay investorts for accepting systematic risk but not for accepting unsystematic risk.True or False

2. A registered bond may also be called a coupon bond.True or False

3. Participating preferred stock provides the benefit of participating in the residual income of the issuer usually reserved for common stock investors only. True or false

Expert Solution

Statement 1

The statement is TRUE.

Investors are not compensated for unsystematic risk since it can be eliminated for free by diversification.

Statement 2

The statement is FALSE.

A registered bond is a bond which has the owner’s name printed on the bond certificate. While, bearer bond contains no information on the owner. Bearer bond will make a payment and coupon payment to whoever holds the bond’s certificate.

Statement 3

The statement is TRUE.

Participating preference bonds have the right to participate in the remaining profit after payment of dividends to equity shareholders. Participating preference bondholders are entitled to receive more dividends in addition to their fixed preferred dividend if the company has surplus profits.

jeff jeffy answered 2 years ago

1. difference between systematic and unsystematic risk? 2. how does diversification reduce unsystematic risk? 3. what...

1. difference between systematic and unsystematic risk? 2. how does diversification reduce unsystematic risk? 3. what does CAPM mean? 4. how risk free asset can influence portfolio expected risk and return perspective? 5. why does the investment theory talk about optimal portfolio?

1) explain the importance of systematic risk and unsystematic risk in risk managament? 2) Discuss the...

1) explain the importance of systematic risk and unsystematic risk in risk managament? 2) Discuss the positive and negative aspects of systemstic risk and unsystematic risk?

Explain the differences between total risk, unsystematic risk, and systematic risk.

Explain the differences between total risk, unsystematic risk, and systematic risk. Identify which risk is measured by standard deviation and which is measured by beta.

How can risk be transferred in financial markets?

Discuss systematic risk and unsystematic risk, and how they are measured. Is it possible to neutralize...

Discuss systematic risk and unsystematic risk, and how they are measured. Is it possible to neutralize or lessen the effects of each of these risks? If yes, how can this be accomplished?

Risk can be subdivided into systematic and unsystematic risk. Describe each type of risk, the related...

Risk can be subdivided into systematic and unsystematic risk. Describe each type of risk, the related compensation for bearing that risk, and give some examples of each type.

Types of Risk Explain the differences between total risk, unsystematic risk, and systematic risk. Identify which...

Types of Risk Explain the differences between total risk, unsystematic risk, and systematic risk. Identify which risk is measured by standard deviation and which is measured by beta. Please explain indepth.

Unsystematic risk is risk which is common to all companies and can't be eliminated by diversification:...

Unsystematic risk is risk which is common to all companies and can't be eliminated by diversification: True False The minimum variance portfollio is defined as: a. The lowest risk portfollio obtainable in the universe of possible portfollios b. A portfollio comprised of a risky asset and a risk-free asset c. The portfollio in a set of available efficient portfollios that has the lowest risk d. The portfollio that has the lowest unsystematic risk An inefficient portfollio is one where another...

How can I calculate the unsystematic risk of an individual stock?

The CAPM contends that there is systematic and unsystematic risk for an individual security. Which is...

The CAPM contends that there is systematic and unsystematic risk for an individual security. Which is the relevant risk variable and why is it relevant? Why is the other risk variable not relevant? Requirements: 250

Question