The systematic risk principle states that the expected return on a risky asset depends only on the asset’s <u>market </u>risk.
<h3>What are
systematic risk principles?</h3>
According to the systemic risk concept, the expected return on an asset is solely determined by its systematic risk. As a result, regardless of how much overall risk an asset carries, just the systematic part is significant in estimating the expected return (including risk premium) on such asset.
Market risk is a kind of systematic risk that affects the entire market. Because it cannot be diversified and distributed, the investor is compensated for it.
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Answer:
The correct answer is: Option; premium or option price.
Explanation:
As the name implies, an option refers to the right that is given to a potential buyer of capital goods to exercise currency trading within a specified time and amount. To carry out this process, an in-depth study must be carried out in order to make the best investment decision, for the benefit of both parties.
For its part, the price of the premium or option refers to the amount paid by the buyer in order to exercise the legitimate right over the capital asset. The premium corresponds to the value paid in excess and that represents a higher value for the seller within market estimates.
Solution:
The reporting unit's book value of $250 million meets the market value of $220 million.
Requirement 1:
Determination of implied fair value of goodwill:
Fair value of Center point, Inc. $220 million
Fair value of Center point’s net assets (excluding goodwill) 200 million
Implied fair value of goodwill $ 20 million
Measurement of impairment loss:
Book value of goodwill $62 million
Implied fair value of goodwill 20 million
Impairment loss $42 million
Requirement 2: If the operating unit's market valuation of 270 million dollars surpasses 250 million dollars, there is no depreciation risk.
