The total risk measures the total variability or volatility of an investment. Which of the following is not a way to estimate total risk?

The total risk measures the total variability or volatility of an investment. Which of the following is not a way to estimate total risk?

By forming an objective probability distribution based on historical data.
By assigning subjective probabilities to various possible outcomes.
By calculating the beta of the investment.
None of the above arrives at an estimate of total risk.

Expert Solution

The beta is a reflection of systematic risk and it doesn't consider the unsystematic risk according to Capital Asset pricing model. It is not a way of measuring total risk. Beta only consider the market related factors.

All the other statements are reflective of total risk.

Correct answer is option (C) By Calculating the beta of the Investment.

jeff jeffy answered 2 years ago

Which of the following investments provides the least variability and risk? a. Investment B: Avg. return...

Which of the following investments provides the least variability and risk? a. Investment B: Avg. return = 12%, std. deviation = 5% b. Investment D: Avg. return = 12%, std. deviation = 8% c. Investment A: Avg. return = 25%, std. deviation = 18% d. Investment C: Avg. return = 8%, std. deviation = 2%

Which of the following statements regarding risk is(are) CORRECT? I. Interest rate risk is the variability...

Which of the following statements regarding risk is(are) CORRECT? I. Interest rate risk is the variability of a security’s returns resulting from changes in interest rates. II. Inflation risk, or purchasing power risk, is the variability of security returns caused by the decline in the purchasing power of invested dollars. I only II only Both I and II Neither I nor II

Which of the following is considered a part of financial risk? a. Demand variability b. Sales...

Which of the following is considered a part of financial risk? a. Demand variability b. Sales price variability c. The extent to which operating costs are fixed d. The ability to change prices as costs change e. Changes in interest rates on debt

1. a. What are the disadvantages of each of the following measures of spread or variability?...

1. a. What are the disadvantages of each of the following measures of spread or variability? Range, Standard Deviation, Variance. b. What are the advantages of each of the following measures of spread or variability? Range, Standard Deviation, Variance. 2. . Discuss when is it most appropriate to use each of the following probability models: Binomial, Poisson, Negative Binomial.

Explain the sources of variability in one-way between-subjects ANOVA (i.e., independent-measures ANOVA) and one-way within-subjects ANOVA...

Explain the sources of variability in one-way between-subjects ANOVA (i.e., independent-measures ANOVA) and one-way within-subjects ANOVA (i.e., repeated-measures ANOVA)?

Which of the following measures is appropriate for a risk that has a low frequency of...

Which of the following measures is appropriate for a risk that has a low frequency of occurrence and a highseverity Avoid Risk Transfer/Share risk Reduce risk Retain risk

(Business and financial risk) Which of the following sources of new earnings volatility demonstrates the effect...

(Business and financial risk) Which of the following sources of new earnings volatility demonstrates the effect of business versus financial risk (discuss the rationale for your decisions): a. Amos Gooding Real Estate Company recently constructed a new office building and borrowed 100 percent of the money needed to fund the project. b. Clearing House Outsourcing has historically paid a printer to prepare all of its printed documents. However, last year the firm acquired its own printing press (paying cash). c....

12.1 (Business and Financial risk) Which of the following sources of new earnings volatility represents the...

12.1 (Business and Financial risk) Which of the following sources of new earnings volatility represents the effect of business versus financial risk (discuss the rationale for your decisions): a. Pajala AB in Sweden is considering implementation of an ambitious lifelong education program that would be offered to all employees, and is willing to borrow 50 percent of the money needed to fund the project. b. Schenker Trans has historically acquired its own trucks, and has recently signed an agreement with...

MARKETING RESEARCH “Measures of Variability” for any distribution. Please discuss the following two measures: (1) Variance;...

MARKETING RESEARCH “Measures of Variability” for any distribution. Please discuss the following two measures: (1) Variance; and (2) Standard Deviation. Please include in your response how each is calculated (please discuss this conceptually, you need not provide the mathematical equations) and the relationship between the two (how are they related, and why do we use the Standard Deviation in analyses instead of the Variance?).

Suppose that you would like to examine the way in which the volatility of index returns...

Suppose that you would like to examine the way in which the volatility of index returns is related to the magnitude of index returns of different signs. To this end, you have estimated the following time-series regression ?ol? =?+?1 ×?ett +?2 ×?t_rettt +?t where ?ol? is the volatility of the S&P500 index returns at time t, ?ett is the level of the S&P500 index return at t, and??_? is a dummy variable that takes the value of 1 if the index return...

Question