1:risk/return 2:equal to/greater or less than 3:an independent/ a stand-alone 4:beta coefficient/standard deviation

5:beta coefficient/variance 6:diversifiableon-diversifiable 7: is/is not 8:non--diversifiable/diversifiable 9:randomon-random 10:increasing/decreasing 11:5000+/2000+ 12:increases/reduces 12:systematic or market/unsystematic or company-specific 13:will not/will

Aa Aa 1. Basic concepts Risk and return Professor Isadore (Izzy) Invest-a-Lot retired two years ago from Exceptional college, a small liberal arts college in Vermont after teaching corporate ance and investment theory for 35 years. Yesterday, Izzy appear on EC LIVE, a television show produced for the students, faculty and staff on the EU campus and the local communities. Barbara Bighair is the host of EC LIVE, and one of Professor Izzy's former students, The following is a transcript of the interview. Unfortunately the software that transcribes the interview into written form failed to understand several words and phrases used in the interview. To complete the transcript and demonstrate your knowledge of the risks and returns of investing, please select the best answer from each dropdown menu. Barbara Good morning, Professor Invest-a-Lot. I'd like to welcome you to ECLIVE, and thank you for coming in today to offer us insights into the basics of investing. I remember your course well, and while my grades didn't always refleefgreat success, I was always very interested in the material and the possibility of using the concepts and techniques when the opportunities arose. Izzy Good morning, Barbara, and please call me, Izzy. Thank you for the invitation to discuss one of the important fundamentals to sound investing: an appreciation of the relationship between the objective or outcome of your investment, that is its return, and the likelihood of receiving it, or the investment's Barbara Let's begin with the way that risk can-or should be analyzed. Izzy, what is investment risk, and how should it be evaluated? Izzy An investment's risk, or the probability that it generates a return that is its expected return, can be asset, or a single-asset portfolio, and that of a multiple asset portfolio. considered from two perspectives: that of The risk of a single asset is best measured by the of the asset's possible outcomes, while the risk of an asset in a multiple-asset portfolio is best measured by its Now, I seem to recall that there are two major types of risk affecting a security: systematic and unsystematic risk. What is the difference between them, and is there a way to reduce your exposure to them? Izzy Those are fantastic questions! or market risk, results from phenomena that affect the majority of firms and Systematic risk, also called securities. Since the events or circumstances that give rise to market risk affect most firms, it possible to diversify away this type of risk