Market risk is also called: I) systematic risk, II) undiversifiable risk, III) f
ID: 2775128 • Letter: M
Question
Market risk is also called: I) systematic risk, II) undiversifiable risk, III) firm specific risk.
If the average annual rate of return for common stocks is 11.7%, and for treasury bills it is 4.0%, what is the market risk premium?
The unique risk is also called the:
D.All of the above
If the correlation coefficient between stock C and stock D is +1.0% and the standard deviation of return for stock C is 15% and that for stock D is 30%, calculate the covariance between stock C and stock D.
A.I only B.II only C.III only D.I and II onlyExplanation / Answer
1) D. I and II only
2) C.7.7%
3) D.All of the above
4) covarinace = 450