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Studentka2010 [4]
4 years ago
6

You expect General Motors​ (GM) to have a beta of 1.3 over the next year and the beta of Exxon Mobil​ (XOM) to be 0.9 over the n

ext year.​ Also, you expect the volatility of General Motors to be​ 40% and that of Exxon Mobil to be​ 30% over the next year. Which stock has more systematic​ risk? Which stock has more total​ risk?
Business
1 answer:
Temka [501]4 years ago
8 0

Answer:

As the beta of GM (1.3) is more than that of XOM (0.9), GM has more systematic risk than XOM.

The volatility of GM (40%) is higher than that of XOM (30%). Thus, GM has a higher total risk than XOM.

Explanation:

The systematic risk is the risk caused by factors that affect all of the market and are unavoidable. Such a risk is also known as a market risk and is measured by the beta of a stock. The market beta is always 1. A stock having a beta higher than 1 has higher systematic risk than market and a stock having a lower beta than 1 has a lower systematic risk than the market.

As the beta of GM (1.3) is more than that of XOM (0.9), GM has more systematic risk than XOM.

Total risk, on the other hand, is the risk that comprises of both systematic and unsystematic risk. The systematic risk is the market risk as mentioned above while the unsystematic risk is the firm specific risk and is avoidable. The total risk is measured by the standard deviation or volatility of the stock. The stock with higher volatility has higher total risk and vice versa.

The volatility of GM (40%) is higher than that of XOM (30%). Thus, GM has a higher total risk than XOM.

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When an individual qualifies for a lower premium or rate than standard risks, the insured is considered a?
Lana71 [14]

When an individual qualifies for a lower premium or rate than standard risks, the insured is considered a Preferred risk

What is an Insurance?

Insurance protection against loss is offered by insurance. It is a form of risk management that is mostly used to reduce the risk of a potential loss that is unknown or contingent. A business that provides insurance is known as an insurer, insurance firm, insurance carrier, or underwriter.

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5 0
2 years ago
An economist resigns her $100,000/year university teaching position to work fulltime in her own consulting business. In the firs
lilavasa [31]

Answer:

ii. Her accounting profit was $150,000

iii. Her economic profit was $50,000

Explanation:

The computation is shown below:

For accounting profit, it is

= Total revenues - total expenses i.e explicit cost

= $250,000 - $100,000

= $150,000

And, for economic profit

= Total revenues - total cost i.e explicit and implicit cost

= $250,000 - $100,000 - $100,000

= $50,000

Hence, the second and third options are correct

7 0
3 years ago
From the set $\{1, 2, 3, \dots, 20\},$ ten numbers are chosen at random, forming a subset. Let $M$ be the largest element among
Marysya12 [62]

The largest element can be as small as 10, which happens when the subset is {1, 2, ..., 10}.  The probability of choosing this subset is (1/2)^10 = 1/1024.  (Every element from 1 to 10 can either be in the subset, or not.)

The largest element can also be 11.  All the numbers in the subset must be from 1 to 10, and we must choose 1 to leave out, so the probability that the largest element is 11 is C(10,1)*1/1024.

The largest element can also be 12.  All the numbers in the subset must be from 1 to 11, and we must choose 2 to leave out, so the probability that the largest element is 12 is C(11,2)*1/1024.

We can do the other cases similarly:

Largest element is 13 -> C(12,3)*1/1024

Largest element is 14 -> C(13,4)*1/1024

Largest element is 15 -> C(14,5)*1/1024

Largest element is 16 -> C(15,6)*1/1024

Largest element is 17 -> C(16,7)*1/1024

Largest element is 18 -> C(17,8)*1/1024

Largest element is 19 -> C(18,9)*1/1024

Largest element is 20 -> C(19,10)*1/1024

Adding these up, we get (1 + C(10,1) + C(11,2) + ... + C(19,10))*1/1024.  Since 1 = C(9,0), we also get (C(9,0) + C(10,1) + C(11,2) + ... + C(19,10))*1/1024.

By the Hockey Stick Identity, C(9,0) + C(10,1) + C(11,2) + ... + C(19,10) = C(20,10), so the expected value of the largest element is 1/11*C(20,10)*1/1024 = 4199/256.

6 0
3 years ago
For which of the following products is its manufacturer most likely to use intensive distribution? Multiple Choice Waterford cry
Sidana [21]

Answer: The correct answer is "Hershey chocolate bars".

Explanation: For Hershey chocolate bars its manufacturer most likely to use intensive distribution due to the characteristics of the product, which are of the edible type, of consumption and of the type of market in which it is competing, to maintain its competitiveness in the market it is necessary to use an intensive distribution.

5 0
3 years ago
Read 2 more answers
It is not a consumers responsibility to report fraudental activity
creativ13 [48]

If this is a true/false question, the answer is FALSE.

It is consumers' responsibility to report fraud when it occurs.

4 0
3 years ago
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