Financial Management: Theory & Practice (16th Edition)

Chapter 6

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Dollar returns is a way of expressing an ... more

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Rates of return is a better method to calculate ... more

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20% ; Calculate the annual rate of return by ... more

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Investment risk is the uncertainty that a ... more

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; Prepare a probability distribution for Company ... more

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The payoff matrix helps in estimating the expected... more

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The standard deviation can be computed by the ... more

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It is 68.26% probable that the actual return for ... more

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Historical average return : 10%Historical sample ... more

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Market risk is the unavoidable risk and it occurs ... more

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A perfect positive correlation is the relationship... more

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A particular investor can not reduce the overall ... more

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(0.35) ; Use the EXCEL CORREL function which is =(... more

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The average beta of a portfolio or stock estimates... more

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Beta is estimated by dividing the standard ... more

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The slope of the regression line represents the ... more

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To estimate beta, the following data is required, ... more

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R2 for a set of data measures the variation around... more

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0.95 ; Calculate the value of the portfolio by ... more

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Using the relative returns graph, the beta of a ... more

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When the inflation increases, it increases the ... more

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The slope of the security market line represents ... more

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A firm’s executive can affect market risk, by ... more

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10.3% ; Compute the required rate of return of the... more

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The efficient market hypothesis (EMH) is a theory ... more

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The three forms of efficient market hypothesis are... more

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Investors try to take advantage of the overvalued ... more

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The violations of the different forms of efficient... more

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Short term momentum is an exception to the weak ... more

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The three factors of the fama french model are:... more

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The predicted return can be estimated by applying ... more

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Fama french factor model is not very helpful in ... more

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Predicted return: 14.9%Unexplained return: 2% ; ... more

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Behavioral finance is a field of study that ... more

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Anchoring bias is the situation wherein investors ... more

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If the standalone risk of the securities is ... more

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If risk aversion of an investor increases, the ... more

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When the beta of a company doubles, it will ... more

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1.018. ; Compute the value of the portfolio by ... more

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10.4% ; Compute the required rate of return for ... more

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16.96% ; Compute the predicted return by applying ... more

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Expected return: 11.4%Standard deviation: 26.68... more

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1.25 ; Calculate the value of the old portfolio (... more

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12.1% ; Calculate the weight of stock A (WeightA) ... more

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1.125 ; Determine the weight of the stock sold in ... more

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The stock with the higher beta is riskier than the... more

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Investment return is the return earned by an ... more

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----Please a helpful rating would be appreciable ... more

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6% ; Compute the expected return (ER) of the 10 ... more

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Stand alone risk is the risk of an individual ... more

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25.19%  ; Calculate the standard deviation of ... more

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The client may be apprehensive in replacing the ... more

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Correlation between two variables is the ... more

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The risk of the portfolio which initially has one ... more

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According to the capital asset pricing model, the ... more

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Security market line (SML) graphically represents ... more

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The correlation coefficient between the market and... more

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The estimated beta using regression analysis-... more

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Weights of the stocks in the portfolio:-... more

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The portfolio of Individual J has performed better... more

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Market equilibrium is a condition where the ... more

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The efficient market hypothesis (EMH) is a theory ... more

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