7 Questions
The US Federal Reserve decides to increase rates of borrowing, which could increase the US 10-year yield. The technology sector could be affected negatively with this development. This is an example of:
Unsystematic Risk
The outbreak of COVID-19 in the word. This is an example of:
Systematic Risk
Unsystematic risk can be minimised by investing in a number of unrelated lines of business. This is an example of:
Diversification at Investor Level
Which one of the following statements is NOT correct?
A perfect correlation results in a correlation coefficient equal and only equal to 1
. If the standard deviation of Alpha Plc is 3.67%, the standard deviation of Hio Inc is 5.78%, and the correlation coefficient between Alpha and Hio is -0.455, the standard deviation of a portfolio containing Alpha and Hio is (assume a 40% weightage on Alpha and 60% weightage on Hio):
3.09%
A perfect correlation results in a correlation coefficient equal to:
+1 or -1
Hypothetically, to combine an infinite number of securities, the_______ would disappear
Unsystematic risks of the portfolio
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