Many investment projects are exposed to diversifiable risks. What does diversifiable mean in this context? How should

Question:

Many investment projects are exposed to diversifiable risks. What does “diversifiable” mean in this context? How should diversifiable risks be accounted for in project valuation? Should they be ignored completely?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Principles of Corporate Finance

ISBN: 978-0077404895

10th Edition

Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen

See More Books

Question Posted: Dec 31, 2012 10:47 AM

See More Questions

How should compensated absences be accounted for?
What does recognition mean in accounting?
What does double-dipping mean in accounting for foreign inflation?
The data below are the calories and grams of sugar in some popular store bought cookies. Calories 143 Grams of Sugar 12 97 9 200 11 149 19 84 4 57 9 198 21
Use the equation = 818.13 + 0.434571x to predict a y-value for each x-value. a. x = 1954 b. x = 1978 c. x = 1989 d. x = 2004
It was a wet and nasty spring in upstate New York, and that combined with the preceding frigid winter led to potholes on every street in the city of Albany. The city government, besieged on all sides...
Automobile Injury Insurance Claims. Refer to the description in Exercise 1.5 .We consider $n=1,340$ bodily injury liability claims from a single state using a 2002 survey conducted by the Insurance...
The trial balances of Panther and Sargo companies of Exercise for December 31, 2012, are presented as follows: Panther Company continues to use the simple equity method. 1. Prepare all the...
Which of the information can be used for specific modulus, mass, and weight for a 24inx24inx1in plate. Density (gm/m^3) Density (kg/m^3) Density (lb/ft^3) Youngs Modulus (GPA) Young's Modulus (Mpsi)...
Reproduced below from Farthington Supply's accounting records is the Accounts Receivable Subledger along with selected General Ledger accounts. During the year 2014, there were no recoveries of...
Define the following terms: a. Cost of debt b. Cost of equity c. After-tax WACC d. Equity beta e. Asset beta f. Pure-play comparable g. Certainty equivalent
John Barleycorn estimates his firms after-tax WACC at only 8%. Nevertheless he sets a 15% companywide discount rate to offset the optimistic biases of project sponsors and to impose discipline on the...
Which is an example of an indirect labor cost? a. Wages for gardeners and landscapers b. Salaries for F&B managers c. Wages for front desk agents d. The Executive Housekeepers monthly salary
Of the following list of evidence, which is considered demonstrative? 1. PowerPoint slides 2. Fingerprints 3. Official documents 4. Testimony by a law enforcement officer with extensive use of hand...
Enron extensively used fair value accounting. What prevents companies from abusing fair value accounting the way that Enron did?
Which of the following is not a methodology for the skimming of receivables and its related concealment? 1. Voiding a sale after the customer leaves the premises 2. Accounts receivable write-offs 3....
Individual rights associated with criminal law are grounded in the following four amendments to the U.S. Constitution: 1. First, Fourth, Fifth, and Ninth 2. Fourth, Fifth, Sixth, and Ninth 3. Fourth,...
Which of the following did not result from SarbanesOxley Act of 2002? 1. Managements assessment of internal controls 2. Prohibitions on personal loans to executives 3. Certification obligations for...
Using the data collected by La Porta et al., cited in this chapter, compare shareholder and creditor rights in India and in Brazil. Interpret the differences you observe.
Hotel Majestic is interested in estimating fixed and variable costs so that the company can make more accurate projections of costs and profit. The hotel is in a resort area that is particularly busy...
Roll a die 25 times and construct a table showing the relative frequency of each of the 6 possible numbers.
Bjorn defaulted on payments of $2000 due 3 years ago and $1000 due 1 years ago. What would a fair settlement to the payee be 1 years from now, if the money 2 could have been invested in low-risk...
Faisal borrowed $3000, $3500, and $4000 from his father on January 1 of three successive years at college. Faisal and his father agreed that interest would accumulate on each amount at the rate of 5%...
Interest rates were at historical highs in the early 1980s. In August of 1981, you could earn 17.5% compounded annually on a five-year term deposit with a Canadian bank. Since then, the interest rate...
What is the minimum quantity firms need to sell in order to start earning profit given insurance costs of $50,000, materials o per unit, and break even quantity is 1500?
Assume a 10% discount rate and compute the present value of Rs. 1100, Rs.900, Rs.1500 andRs.700 received at the end of 1-4 years In the above sum if the amounts are received at the beginning of the...
Recall that an FX rate XXXYYY = Bid/Offer gives the rate of YYY per XXX. You can buy XXX/sell YYY at the offer price and sell XXX/buy YYY at the bid price. EURUSD is trading at 1.4760/1.4763 USDJPY...

Many investment projects are exposed to diversifiable risks. What does diversifiable mean in this context? How should

Question:

Step by Step Answer:

A diversifiable risk has no affect on the risk of a welldiver...View the full answer

Principles of Corporate Finance

Students also viewed these Corporate Finance questions