Question

The total systematic risk of a firm’s equity has two parts. What are they

The total systematic risk of a firm’s equity has two parts. What are they

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer : The total systematic risk of a firm’s equity has two parts. i.e Financial Risk and Business Risk.

Financial Risk is related to capital structure of the company . Ti refers to whether the organisation is able to manage its debt . This type of Risk is detremined by the organisation financial policy.

Business risk is related to operations of organisation . It evaluates whether the company is generating sufficient Income or not as to be able to meet its expenses.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
what is systematic risk? how does it differ from total risk?
what is systematic risk? how does it differ from total risk?
Stock A has more systematic risk than stock B, stock B has more unsystematic risk than...
Stock A has more systematic risk than stock B, stock B has more unsystematic risk than stock A, and it is unclear which stock (A or B) has more total risk. Both stock A and stock B have more systematic risk than the market. Which of the following assertions is most consistent with finance theory regarding risk and diversification?
a) Explain the concepts of variance (total risk) and beta (systematic risk) in portfolio theory and...
a) Explain the concepts of variance (total risk) and beta (systematic risk) in portfolio theory and the capital asset pricing model. b) Discuss why according to the capital asset pricing model that total risk should not be rewarded by the capital market. You may use diagrams in your explanation if you wish.
17. If an equity portfolio manager wished to increase the systematic risk of the equity portfolio...
17. If an equity portfolio manager wished to increase the systematic risk of the equity portfolio it could be done by Select one: a. Selling futures contracts on a stock index. b. Selling Treasury bond futures contracts. c. Purchasing futures contracts on a stock index. d. Purchasing Treasury bond futures contracts. e. None of the above. 18. Calculate the required rate of return on equity based on the following information. From year 2013 onward growth in FCFE is expected to...
Systematic risk Select one: a. is unique to a company or industry. b. describes the total...
Systematic risk Select one: a. is unique to a company or industry. b. describes the total risk of a stock or fund. c. All of these are true statements. d. is a risk that affects a large number of stocks. e. is also known diversifiable risk.
Systematic risk Select one: a. is unique to a company or industry. b. describes the total...
Systematic risk Select one: a. is unique to a company or industry. b. describes the total risk of a stock or fund. c. All of these are true statements. d. is a risk that affects a large number of stocks. e. is also known diversifiable risk.
what is the difference between diversifiable risk and systematic risk? provide examples as appropriate.
what is the difference between diversifiable risk and systematic risk? provide examples as appropriate.
1. What is the systematic risk of a stock? Give an example.
1. What is the systematic risk of a stock? Give an example.
Find out the values of total risk, systematic and nonsystematic risk of stock j in variance...
Find out the values of total risk, systematic and nonsystematic risk of stock j in variance term. The mean of excess market return is 1.33% The mean of excess return on asset j is 3.0% The variance of excess market return is 2.89% The variance of excess returns on asset j is 2.0% The covariance of excess market returns and excess returns on asset j is 2.33%
What is the difference between systematic and nonsystematic risk? What are some examples of each?
What is the difference between systematic and nonsystematic risk? What are some examples of each?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT