1 Consider the following two statements concerning risk analysis:1. Sensitivity analysis provides clear decision rules concerning acceptance or rejection of aninvestment project.2. The risk-adjusted discount rate adds a risk premium to the expected rate of inflation to deriva discount rate for investment projects.Which one of the following combinations (true/false) relating to the above statements is correct?O a. Statement 1 True Statement 2 FalseO b. none of the answer provided are correctStatement 1 True Statement 2 TrueStatement 2 Falsec.d. Statement 1 FalseO e. Statement 1 FalseStatement 2 True

Risk analysis is defined as the identification as well as analysis process of the potential issues,…

Consider the following two statements concerning risk analysis: 1. Sensitivity analysis provides clear decision rules concerning acceptance or rejection of an investment project. 2. The risk-adjusted discount rate adds a risk premium to the expected rate of inflation to deri a discount rate for investment projects. Which one of the following combinations (true/false) relating to the above statements is correct? O a. Statement 1 True Statement 2 False O b. none of the answer provided are correct O c. Statement 1 True Statement 2 True O d. Statement 1 False Statement 2 False e. Statement 1 False Statement 2 True

Consider the following two statements concerning risk analysis: 1. Sensitivity analysis provides clear decision rules concerning acceptance or rejection of an investment project. 2. The risk-adjusted discount rate adds a risk premium to the expected rate of inflation to deri a discount rate for investment projects. Which one of the following combinations (true/false) relating to the above statements is correct? O a. Statement 1 True Statement 2 False O b. none of the answer provided are correct O c. Statement 1 True Statement 2 True O d. Statement 1 False Statement 2 False e. Statement 1 False Statement 2 True

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider the following two statements concerning risk analysis: 1. Sensitivity analysis provides clear decision rules concerning acceptance or rejection of an investment project. 2. The risk-adjusted discount rate adds a risk premium to the expected rate of inflation to derive a discount rate for investment projects. Which one of the following combinations (true/false) relating to the above statements is correct? Select one: a. Statement 1 is False & Statement 2 True b. Statement 1 is False & Statement 2 False c. Statement 1 is True & Statement 2 is False d. Statement 1 is True & Statement 2 is True e. None of these answers are correct
Give typing answer with explanation and conclusion Please could you anwser it with true or false : Q1)Risk-neutral evaluation assumes that the expected return on the underlying asset is the risk-free rate and discounts at the risk-free rate.
List which of the following statement(s) concerning risk are correct? 1. Nondiversifiable risk is measured by beta. II. The risk premium increases as diversifiable risk increases. III. Systematic risk is another name for nondiversifiable risk. IV. Diversifiable risks are market risks you cannot avoid.
Read the following statements w.r.t. investment appraisal techniques and identify the most appropriate option (i) The rate of return method does not take care of timings of returns. (ii) Simple Payback method does not consider time value of money. Select one: a. Both statements are correct O b. First statement alone is correct c. Second statement alone is correct d. Both statements are wrong
Which of the following is also known as what if analysis? a. None of the options b. Sensitivity analysis c. Risk analysis d. Project analysis
The desired rate of return on an investment should reflect the degree of risk involved. A. True B. False
1. Define the components of holding period return. Can any of these components be negative? 2. How do you understand an investment risk and what statistic tools can be used to measure it?
9. When we use the WACC to assess a project, we assume that the ________ ratio does not change. A. reward to systematic risk B. risk to reward C. debt to equity D. volatility to systematic risk
Which of the following statements about payback (payback period) is most correct? a. Payback is a measure of time breakeven. b. Payback is a rough measure of risk. c. Payback is a rough measure of liquidity. d. Both a. and b. are correct. e. Answers a., b., and c. are all correct.
An analyst wanting to assess the downside risk of an alternative investment and is considering the Sortino ratio, value at risk (VaR) and standard deviation of returns. Which of these would be appropriate and why? Explain why one or more of the options above are correct and explain why, if any of the remaining options are incorrect.
At a minimum, which of the following would you need to know to estimate the amount of additional reward you will receive for purchasing a risky asset instead of a risk-free asset? 1. I. Asset's standard deviation 2. II. Asset's beta 3. III. Risk-free rate of return 4. IV. Market risk premium I, III, and IV only I, II, III, and IV I and III only II and IV only III and IV only ооо O
A3) Finance Which one is a financial risk? Select one: a. Uncertainty about demand b. uncertainty about cost d. None of the above

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