Beta- measure of systematic risk, Risk Management

Assignment Help:

Beta- measure of systematic risk for an investor who holds the shares of one company, it is total variance that is more relevant. But for most usual active investor who wishes to diversify into different securities, the important risk measure is the market risk. William sharpie's market model helps in measuring the systematic risk in terms of a simple statistical regression relationship of beta which is an index of sensitivity of return of an individual security to that of the market returns securities those are about as volatile as the market will have beta coefficients around 1.0 and those of less volatile will have lower coefficients when beta represents predicted response of an individual security's returns to the change in market returns, for any given the variation in the market return, risk of each asset can be determined. The variation is independent of the course of the economy , which remains uncorrelated with the market is its unsystematic or the specific risl. Theirs specific risk has caused the decline in share prices of union carbide in 1984 due to Bhopal disaster and market risk caused all the stocks to decline in 1991 due to Bhopal disaster and market risk caused all the stocks to decline in 1992 due to multi crore security scam.


Related Discussions:- Beta- measure of systematic risk

Historical simulation approach, How can I calculate 10-day 99% VaR for port...

How can I calculate 10-day 99% VaR for portfolio comprising two banks by using the Historical Simulation Approach ?

Bankruptcy of lehman brothers, In its early stages, the financial crisis ma...

In its early stages, the financial crisis manifested itself as an acute liquidity shortage among financial intermediaries. In this phase, concerns over the solvency of the sophisti

binomial option pricing model , Question 1 Zero coupon yields (all yie...

Question 1 Zero coupon yields (all yields are continuously compounded) are 3.00% for three months, 3.50% for six months, 3.60% for nine months and 3.80% for twelve months. Nort

Explain what is meant by the term single sign-on, Question: (a) Explain...

Question: (a) Explain what is meant by the term Single sign-on in the context of access control? Give three examples of single sign-on technologies. (b) Describe how the Ker

firms risk management strategies-tactics , 1. You are to analyze:  [1] in...

1. You are to analyze:  [1] internal financial options offered to employees as a benefit, [2] the external financial options that are offered by markets to outside investors who ma

Essentials steps in developing safe systems of work, Question : A safe ...

Question : A safe system of work is a formal procedure which results from a systematic examination of a task in order to identify all the hazards and assess the risks with a vi

Option Pricing, #question.Price a European call and put option using expli...

#question.Price a European call and put option using explicit, implicit and cranck nicholson methods in Matlab or R.

Analyse the risks as well as suggested responses, Question: You work in...

Question: You work in one of the major commercial banks of the island and your institution is contemplating venturing into Internet banking in the near future. As the risk m

Steps that a project manager include in risk management, Risk management is...

Risk management is an important aspect of managing a project in order to ensure that the project objectives are completed successfully and with the minimum of undesirable events. T

Four critical components of risk-management integrity, The purpose of this ...

The purpose of this memorandum is to outline in sufficient detail the terms of the audit engagement. In planning the audit engagement for Toy Local Corporation for the year ended O

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd