The two things which do not allow for a complete market for the allocation of risk...

The two things which do not allow for a complete market for the allocation of risk to exist are ___________________ and ____________________.

This is all that was given, it is fill in the blank.

Solutions

Expert Solution

systamatic risk and unsystamatic risk

A market portfolio, by nature of being completely diversified, is subject only to systematic risk, or risk that affects the market as a whole, and not to unsystematic risk, which is the risk inherent to a particular asset class.

Systematic risk refers to the risk inherent to the entire market or market segment. Systematic risk, also known as “undiversifiable risk,” “volatility” or “market risk,” affects the overall market, not just a particular stock or industry. This type of risk is both unpredictable and impossible to completely avoid. It cannot be mitigated through diversification, only through hedging or by using the correct asset allocation strategy

Unsystematic risk is unique to a specific company or industry. Also known as “nonsystematic risk,” "specific risk," "diversifiable risk" or "residual risk," in the context of an investment portfolio, unsystematic risk can be reduced through diversification.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

whats the diffeent between the market risk and stock specific risk? which of the two risk...

whats the diffeent between the market risk and stock specific risk? which of the two risk can be dealt via diversification

One of the things that some businesses do to minimize risk in this area is to...

One of the things that some businesses do to minimize risk in this area is to use wired networking (as opposed to wireless networking). If you were an e-business owner would you consider using 100% wired networking? Why or why not?

How do you test if there is evidence of a relationship between two things? Which statistically...

How do you test if there is evidence of a relationship between two things? Which statistically test would need to be used?

Discuss the difference between market allocation of resources and government allocation of resources. Which one provides...

Discuss the difference between market allocation of resources and government allocation of resources. Which one provides for a more efficient allocation?

Capital allocation in the market is a major function of stock or bond market. The allocation...

Capital allocation in the market is a major function of stock or bond market. The allocation should be based on the performance of firm measured by accounting figures. True False

Use the complete HTML to do all of the things: 3-3) Install and work with Redis....

Use the complete HTML to do all of the things: 3-3) Install and work with Redis. 3-4) Write a JQuery Ajax program that can communicate with a flicker to get the last pictures taken from any place or related to any concept(s) the user has written in a textbox, say Sydney, train. Some information associated with the image like its topic, time taken, and its link needs to be appeared with it. 3-5) Develop a server which can serve the...

Describe the different types of risk in the market. Do a full risk analysis of an...

Describe the different types of risk in the market. Do a full risk analysis of an industry include porters 5 forces model in the analysis. This is an essay question.

Describe scenario analysis in addressing risk. What are the things you should be able to do...

Describe scenario analysis in addressing risk. What are the things you should be able to do with scenario analysis? How does a Tornado Diagram extend the scenario analysis?

Other things held constant, an increase in financial leveragewill decrease a for-profit business’s market risk...

Other things held constant, an increase in financial leverage will decrease a for-profit business’s market risk as measured by its beta coefficient.TrueFalse

Imagine that the following two things occur at the same time in the market for economics...

Imagine that the following two things occur at the same time in the market for economics textbooks: Event 1: Economics professors decide to no longer require textbooks. Event 2: Printing cost for textbooks are lowered. After the events, you learn that equilibrium price of textbooks decreased and the equilibrium quantity of textbooks decreased. What must be true? The change caused by Event 1 was larger than the change caused by Event 2 The change caused by Event 2 was larger...

Subjects