Paragraph Styles wnteup 8-1: What is risk in the context of financial dedsion making? 8-2: Define return, and describe how to find the rate of return on an investment. 8-3: Compare the following risk preferences: (a) risk averse, (b) risk neutral, and (c) risk seeking. Whic risk preference is most common among financial managers? 8-4: Explain how the range is used in scenario analysis 8-5: What does a plot of the probability distribution of outcomes show a decision maker about an asset's risk? 8-6: What relationship exists between the size of the standard deviation and the degree of asset risk? 8-7: What does the coefficient of variation reveal about an investment's risk that the standard deviati does not? 8-8: What is an efficient portfolio? How can the return and standard deviation of a portfolio be determined? 8-9: Why is the correlation between asset returns important? How does diversification allow risky asse to be combined so that the risk of the portfolio is less than the risk of the individual assets in it? 8-10: How does international diversification enhance risk reduction? When might international diversification in subpar returns? What are political risks, and how do they affect international diversification? 8-11: How are total risk, undiversifiable risk, and diversifiable risk related? Why is nondiversifiable risk the only relevant risk? 8-12: What risk does beta measure? How can you find the beta of a portfolio? 8-13: Explain the meaning of each variable in the capital asset pricing model (CAPM) equation. What is the security market line (SML)? 8-14: What impact would the following changes have on the security market line and therefore on the required return for a given level or risk? (e) An increase in inflationary expectations. (b) Investors become less risk-aver 0 PID=MMDDYYYY P PID-MMDDYYYY P