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a) Elaborate around the concept of risk and how to address it when making an investment appraisal. 12 points b) Explain with an example
a) Elaborate around the concept of risk and how to address it when making an investment appraisal. 12 points b) Explain with an example the effect from perfect positive and negative correlation when making an assessment of an investment with multiple assets. 4 points c) Explain the concept of unsystematic and systematic risk. 2 points d) You got an offer to by a share. The price is 20p and the market is expected to grow by 5% in a year until you sell the share after having received 1p in dividend. Your required rate of return is 12%. Will you accept the offer? Make proper calculations and give an explanation for your decision. 4 points e) A share has a Beta of 1,2 and the risk free rate is 2%. Your average risk premium for shares is 9%. What would your expected return be. Explain this from a theoretical perspective. 6 points
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Investment Appraisal and Risk a Risk and Investment Appraisal 12 points Risk is the uncertainty surrounding the expected future returns of an investmentIt refers to the possibility that the actual out...Get Instant Access to Expert-Tailored Solutions
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