similar risk.

You should invest in a stock if the expected rate of return on an asset with similar risk is higher than the expected rate of return from the stock.

Read the following descriptions and identify the type of risk or term being described:

Description

Terms

This type of risk relates to fluctuations in exchange rates.

This type of risk relates to the possibility that a firm will not be able to service its existing debt.

A measure of the variability of a set of outcomes.

The difference between the expected rate of return on a given risky asset and the expected rate of return on a less risky asset.

You invest $$100,000$ in only one stock. What kind of risk will you primarily be exposed to$?$

Stand$-$alone risk

Portfolio risk

Generally, investors would prefer to invest in assets that have:

a higher$-$than$-$average expected rate of return given the perceived risk.

a lower$-$than$-$average expected rate of return given the perceived risk.