2181 - Chapter 7 - Key terms

2181 - Chapter 7 - Key terms

Assessment

Flashcard

Social Studies

University

Hard

Created by

Phuong Vu

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15 questions

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1.

FLASHCARD QUESTION

Front

diversification

Back

Spreading a portfolio over many investments to avoid excessive exposure to any one source of risk.

2.

FLASHCARD QUESTION

Front

insurance principle

Back

The law of averages. The average outcome for many independent trials of an experiment will approach the expected value of the experiment.

3.

FLASHCARD QUESTION

Front

market risk

Back

Factors common to the whole economy; non-diversifiable risk, also called systematic risk.

4.

FLASHCARD QUESTION

Front

systematic risk

Back

Factors common to the whole economy; non-diversifiable risk, also called market risk.

5.

FLASHCARD QUESTION

Front

Non-diversifiable risk

Back

Factors common to the whole economy; also called systematic risk.

6.

FLASHCARD QUESTION

Front

diversifiable risk

Back

The chance that there will be a change in the price of a security attributable to issues specific to that firm: nonmarket risk. In contrast, non-diversifiable risk refers to systematic or market risk.

7.

FLASHCARD QUESTION

Front

minimum-variance portfolio

Back

The selection of risky assets with lowest variance.

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