risk and return disscussion

Anonymous
timer Asked: Feb 8th, 2019
account_balance_wallet $15

Question Description

The most commonly used metrics of risk are: standard deviation (variance and coefficient of variation are also based on st. deviation) and beta. Explain and compare these metrics. Give couple examples when financial manager should be using each of these risk metrics.

Also, explain the purpose of diversification: what type of risks diversification helps to reduce, which risks cannot be eliminated by diversification.

Tutor Answer

Tutor_Booth
School: Carnegie Mellon University

Hey! Kindly find the attached answer and in case of any issue, let me know. Thank you and all the best.

Running head: RISK AND RETURN

1

Risk and Return
Name
Institution
Date

RISK AND RETURN

2

Introduction
Risk is defined as a chance in which the exact return of an investment will be different
than it is expected. In case of risk, a business is possible of losing all or some of their original
investment. On the other hand, returns are the losses or gains which are acquired from a security
in a specific period of time and they are quoted as a percentage. Generally, the most used metrics
in risk ...

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Anonymous
Goes above and beyond expectations !

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