Question

vv Discuss the differences between firm-specific risk and market-risk using at least two real-world examples.

vv

Discuss the differences between

firm-specific risk and market-risk using at least two real-world examples.

Homework Answers

Answer #1

Firm specific risk will mean that all such diversifiable risk can be eliminated by proper allocation of capital to different securities. These are the risk which are unsystematic in nature and they will be related to a particular firm or particular industry.

Market risk wale meen all such systematic risk which can never be diversified and these risks are inherent risk that will be existent due to operating in the market because they will be risk of operating into the market and these are mostly macro risk.

Firm specific risk can be diversified away but market risk can never be diversified away.

Examples of firm specific risk will be change in demand pattern in a particular industry or legal penalty over one company.

Example of market risk will be change in the market interest rate or Risk of political uncertainty.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Please explain all in microsoft word Using real world examples, discuss the necessary conditions that must...
Please explain all in microsoft word Using real world examples, discuss the necessary conditions that must exist in order for a market to be perfectly competitive.
These shortcomings are also listed in Chapter 6 of the text. Provide specific real-world examples of...
These shortcomings are also listed in Chapter 6 of the text. Provide specific real-world examples of two of these limitations. Do not use real-world examples that were listed in the text. The list of shortcomings: Non-market Goods and Services. Underground Economy. Quality of the Environment. Leisure time. Happiness.
Discuss the differences between an alkene and an alkane. Give two examples.
Discuss the differences between an alkene and an alkane. Give two examples.
Define the efficient market hypothesis (EMH). Discuss the real world evidence for the EMH, including differences...
Define the efficient market hypothesis (EMH). Discuss the real world evidence for the EMH, including differences across countries. Identify investment behaviors and trading biases that suggest investors ignore the evidence supporting the EMH.
5. Discuss the differences between an alkynes and alkanes. Give two examples
5. Discuss the differences between an alkynes and alkanes. Give two examples
Discuss 2 real world examples of randomness and the use of probability to understand your examples.
Discuss 2 real world examples of randomness and the use of probability to understand your examples.
What are 8 examples of firm specific risk?
What are 8 examples of firm specific risk?
Discuss a specific real-world illustrative example of Neoclassical economics policy
Discuss a specific real-world illustrative example of Neoclassical economics policy
Provide a real-world example of a wholesaler, a distributor, and a retailer. Discuss the differences among...
Provide a real-world example of a wholesaler, a distributor, and a retailer. Discuss the differences among them.
What are the differences between crude, specific, and adjusted rates? Please offer specific examples
What are the differences between crude, specific, and adjusted rates? Please offer specific examples
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT