answer with 100 words 1.Investors should be more concerned about the diversifiable risk rather than non-diversifiable...

answer with 100 words

1.Investors should be more concerned about the diversifiable risk rather than non-diversifiable risk in their portfolios. Do you agree with this statement? Explain

2.Internal rate of return is a better capital budgeting technique than Net Present Value. Do you agree with this statement? Explain.

Expert Solution

1: Ans - I don't agree with the statement. Diversifiable risks are unsystematic risks, that is company specific risk. Company specific risk may be due to poor management, internal issues, fraud etc. So if you build a portfolio with different assets, then the unsystematic risks can be diversified. It means it is quite unlikely that all the companies will indulge in fraud at the same time. So buying different securities with low correlation between themselves, eliminates diversifiable risk. On the other hand, the non-diversifiable risk in the systematic risk. Systematic risk is the risk of market not performing well. So an investor should be compensated for the Non-Diversifiable risk that he is taking.

2:Ans - I don't agree with the statement:

Mostly IRR and NPV give the same Accept / Reject decision for a project. There may be times when they may differ.

The prime objective for the management should be to increase the wealth of shareholders. NPV shows the exact value by which the shareholders wealth will be increased if the management accepts the project. Usually the management should accept all the projects with positive NPV, but due to budget constraints, the management accepts the project with highest NPV. IRR shows the internal rate of return, it doesn't give an idea to investors regarding the actual increase in wealth in dollar terms. So NPV is better.

jeff jeffy answered 1 year ago

1. Explain why most firms would be more concerned about liability risk than property risk.

According to the Capital Asset Pricing Model (CAPM), investors will have to face “diversified risk” and “non-diversifiable risk”.

Using an example from your organisation, differentiate between “period costs” and “product costs”.According to the Capital Asset Pricing Model (CAPM), investors will have to face “diversified risk” and “non-diversifiable risk”.Distinguish between the two.

1/ Explain why investors are very concerned about cash flow, possibly more than income? 2/ Explain...

1/ Explain why investors are very concerned about cash flow, possibly more than income? 2/ Explain why aggressively pursing customers to pay their bills, while stalling payment of suppliers will improve the companies cash position, but may not be wise from a relationship standpoint.

In 100 words, or fewer, explain why investors should be more interested in the Diluted EPS...

In 100 words, or fewer, explain why investors should be more interested in the Diluted EPS number than the Basic EPS number. Company X information for Diluted Shares calculations for period 201X: Earnings for Year 201X - $20 million Average Basic shares outstanding for Company X in 201X – 10 million Average Stock Price for year 201X - $6.00 Warrants to purchase common shares: - Warrants A to purchase 2 million shares ex @ $2.00 - Warrants B to purchase...

In short answer format, use no more than 100 to 150 words to answer the following...

In short answer format, use no more than 100 to 150 words to answer the following questions: 3. Why have the changes made during the Civil Rights Movement of the 1950s and 1960s not eliminated the income and educational gaps between groups?

1. A financial manager should be more interested / concerned with the book balance than the...

1. A financial manager should be more interested / concerned with the book balance than the net float and bank cash. True&False 2. ..........refers to the time required to clear a cheque through the banking system. a. Mail float b. Availability float c. Disbursement float 3. Short term marketable securities are usually referred and considered as cash equivalents? True&False 4. The differnce between bank cash and book cash is called float. True&False 5. .................are incurred with a firm runs out...

1. Should we be more concerned about the likelihood of collusion in a market with few...

1. Should we be more concerned about the likelihood of collusion in a market with few firms representing a large share of the market compared to a market where each firm has a low market share, all else equal? You must EXPLAIN your answer. 2. Is collusion more likely to be sustainable in declining markets or in growing markets? You must EXPLAIN your answer.

TOPIC: 1987 US BLACK MONDAY. answer should be more than 5000 words.

Use no more than 100 words total to write about the difference between Antitussives and Protussives...

Use no more than 100 words total to write about the difference between Antitussives and Protussives and the difference between Decongestants and Antihistamines.

1-) Answer the followings; a-) whenever they live together rather than apart there's more similarity in...

1-) Answer the followings; a-) whenever they live together rather than apart there's more similarity in IQ scores between identical twins, siblings, biological parents and children, and even unrelated individuals. These findings suggest that _______________________ contributes to intelligence. b-) The _____________ effect refers to the tendency for absolute intelligence to increase over successive generations. c-) All psychological tests, including intelligence tests, must meet three criteria. Those include ___________, ______________ and __________. d-) A physchologist administer an intelligence test to a...

Question