--%>
Assignment Help - homework help

Explain non diversifiable risk and how is it measured

Explain non diversifiable risk? How is it measured?

Unless the returns of one-half the assets into a portfolio are entirely negatively correlated along with the other half-that is extremely unlikely-some risk will remain after assets are combined in a portfolio. The degree of risk which remains is non diversifiable risk, the part of portfolio's entire risk which can't be eliminated by diversifying.

Non diversifiable risk is measured by a term termed beta (β). The final group of diversified assets, the market, contain a beta of 1.0. The betas of portfolios, and individual assets, relate their returns to those of the total stock market. Portfolios along with betas higher than 1.0 are relatively more risky in compare of the market. Portfolios along with betas less than 1.0 are relatively less risky than the market. (Risk-free portfolios have a beta of zero.)

 

   Related Questions in Finance Basics

  • Q : What is Capital Outlay Capital Outlay

    Capital Outlay (CO): A character of expenses of funds to obtain land, plan and build new buildings, expand or transform existing buildings, and/or purchase tools associated to such construction.

    		•
  • Q : What are the Changes in Authorized

    Changes in Authorized Positions (“Schedule 2”): This is a schedule in the Governor’s Budget which reflects staffing changes made following to the adoption of the present year budget and enacted legislation. This planned document modi

    		•
  • Q : Why accounting profits and cash flows

    Normal 0 false false

    		•
  • Q : Why do assets equal the sum of total

    Why do overall assets equal the sum of total liabilities and equity?  Describe.            Assets = Liabilities + EquityAssets are the items of value business owns. Liabilities ar

    		•
  • Q : Describe the primary variables in EOQ

    Describe the primary variables being balanced in the EOQ inventory model? Clarify In the EOQ model the primary variables being balanced are carrying costs and ordering costs. The more frequent orders are placed the lower the firm's carrying co

    		•
  • Q : Describe significance of excess reserves

    Normal 0 false false

  • Q : What are A-pages A-pages : An ordinary

    A-pages: An ordinary reference to the Governor's Budget synopsis. The Budget highlights now contained in the Governor's Budget synopsis were just once contained in front of the Governor's Budget on pages A-1, A-2, and so on, and were,

    		•
  • Q : Define Workload Workload : The

    Workload: The measurement of rises and reduces of inputs or demands for work, and an ordinary basis for projecting related budget requires for both established and new programs. This approach to BCPs is frequently viewed as an alternative to outcome o

    		•
  • Q : What is the efficiency factor Normal 0

    Normal 0 false false

  • Q : None what are the disadvantages of

    what are the disadvantages of working capital

    		•