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Summary BUS FP3062 Assessment7 Att1.docx Characterizing Risk and Return Capella University BUS-FP3062 Characterizing Risk and Return 1. Investment risk refers to uncertainties investors are ready and willing to shoulder to realize gains from an investment £4.23
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Summary BUS FP3062 Assessment7 Att1.docx Characterizing Risk and Return Capella University BUS-FP3062 Characterizing Risk and Return 1. Investment risk refers to uncertainties investors are ready and willing to shoulder to realize gains from an investment
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BUS FP3062 Assessment7 A Characterizing Risk and Return Capella University BUS-FP3062 Characterizing Risk and Return 1. Investment risk refers to uncertainties investors are ready and willing to shoulder to realize gains from an investment (Wall Street mojo, 2020).Finance and investments are...
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Characterizing Risk and Return
Capella University
BUS-FP3062
Characterizing Risk and Return
, 2
1. Investment risk refers to uncertainties investors are ready and willing to shoulder to
realize gains from an investment (Wall Street mojo, 2020).Finance and investments are the
probability of having actual results differing from the expected results or earnings, categorized as
systemic or non-systemic. Systemic risks deal with an investment market's uncertainty but un-
systemic consists of uncertainties that affect investment performance but are asset-specific.
Measures of risks are statistical formulae and tools used to assess the risks involved in business
investments.
Risks are measured by quantifying volatility, which is the differencebetween actual and
average/expected returns. The resultant difference is the standard deviation, which defines the
expected range of returns from an investment. Generally, the risk is measured by standard
deviation, beta coefficient, conditional value at risk, or value.
2. Firm-specific risk are risks that involve a particular company or firm due to some
business issues that impact the firm or industry-leading to uncertainties. We can refer to the
portion of the total risk attributable to a specific firm or industry factors. Sources of this risk
include poor management decisions, a new competitor's entrance, and technology
changes.Marketrisks are a portion of the total risk attributable to general economic factors (Hue,
Jinks, Spain, Bora, & Siew, 2019). Sources of market risks are recessions and depressions,
political uprising, interest rate changes, natural calamities, and terrorism. This can lead to
3. The coefficient of variation is used to measure the risk associated with an investment
and is simply a ratio of the standard deviation to mean or expected cash flow. It enables investors
to quantify the volatility assumed concerning expected returns. A lower coefficient of variation
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