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Term Answer Description Risk A. The risk of an asset when it is the only asset...

Term Answer Description Risk A. The risk of an asset when it is the only asset in an investors portfolio. Expected rate of r

Term Answer Description Risk A. The risk of an asset when it is the only asset in an investor's portfolio. Expected rate of return That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Beta coefficient This model determines the appropriate required return on a security as the sum of the market's risk-free rate and a risk premium based on the market's risk premium and the security's beta coefficient. Market risk The general term that describes the portion of an asset's total expected return that is greater than the return earned on the market's risk-free rate. E. Correlation coefficient (e) A measure of the sensitivity of a security's returns to fluctuations in the return earned by the market portfolio. Stand-alone risk F. The potential for variability in the possible outcomes associated with an investment. Risk premium O G. The me The mean of the probability distribution of an investment's possible returns, and the return expected to be realized from owning it. Diversification 0 H. The value of this ranges The value of this ranges from +1.0, denoting that two variables move up and down in perfect synchronization to -1.0, denoting that two variables move up and down in exactly opposite directions. The condition in which the expected return on a security equals its required return, and there is no pressure on its price to change. I. Capital Asset Pricing Model Equilibrium The practice of creating a portfolio of assets for the purpose of reducing the stand-alone risk of the individual assets in the portfolio.
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Term Answer Risk G Expected rate of return Description The potential for variability in the possible outcomes associated with

Correlation coefficient The value of this ranges from +1.0, denoting that two variables move up and down in perfect synchroni

Capital Asset Pricing Model This model determines the appropriate required return on a security as the sum of the markets ri

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