Finance Final Franken

beta of 1

A ________ is the market's measure of systematic risk.

unsystematic risk

An investor who owns a well-diversified portfolio would consider ________ to be irrelevant.

unsystematic

An unexpected post on social media caused the prices of 22 different companies' stocks to immediately increase by 10 to 15 percent. This occurrence is best described as an example of ________ risk.

portfolio.

Buchi owns several financial instruments: stocks issued by seven different companies, plus bonds issued by four different companies. Her investments are best described as a(n):

systematic

Most financial securities have some level of ________ risk.

Beta

Of the options listed below, which is the best measure of systematic risk?

security market line

The ________ is a positively sloped linear function that plots securities' expected returns against their betas.

10

The majority of the diversifiable risk in a portfolio can be eliminated by owning as few as ________ stocks.

market risk premium.

The slope of the security market line is the:

risk-free rate

To calculate the expected risk premium on a stock, one must subtract the ________ from the stock's expected return.

It can be effectively eliminated by portfolio diversification.

Which of the following statements regarding unsystematic risk is accurate?

Standard deviation; beta

________ measures total risk, and ________ measures systematic risk.