Purchase Solution

Risk

Not what you're looking for?

Ask Custom Question

1. You have a friend who is always getting into trouble by taking unwise risks. What advice, based on what you have learned in this course, would you give this person? Conversely, what advice would you give someone you believe to be excessively wary of risk? Also, assume you are an investor in the stock market. What would be your position in that market now?

2. The friend is 30 and has saved $6,000. Wants to put it into something that pays better than a passbook savings account. Is starting to think about saving for retirement, once the student loans are paid off.

Purchase this Solution
Solution Summary

You have a friend who is always getting into trouble by taking unwise risks. What advice, based on what you have learned in this course, would you give this person? Conversely, what advice would you give someone you believe to be excessively wary of risk? Also, assume you are an investor in the stock market. What would be your position in that market now?

Solution Preview

I will advice the friend to avoid getting into riskier investments by putting all his eggs into one basket or in other words, putting all his investments in one place and thus exposing himself to huge risks. Instead, he should diversify his risk by putting his instruments into different places or instruments, such as fized income products, equities, etc.Since he hasn't made much money in ...

Solution provided by:
Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
Recent Feedback
  • "Thank you. "
  • "Thank you"
  • "Thank you. I got 20/20 last week for my discussion you help me out with."
  • "Thank you. Great Job. "
  • "Thank you. Great Job. "
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

View More Free Quizzes
Related BrainMass Solutions

  • Unique Risk (Firm-specific risk) vs Market Risk (Systematic risk)

    155504 Unique Risk (Firm-specific risk) vs Market Risk (Systematic risk) In financial theory, the total risk (stand alone risk) is composed of the unique risk and the market risk.

  • Beta

    The total risk of a portfolio (indeed of a security) consists of two parts: 1) Market (or systematic) Risk 2) Unique (or firm-specific) Risk Total risk = Systematic risk + Unsystematic risk Systematic risk is risk that influences a large number of

  • Risk-Reward Paradox

    169902 Risk-Reward Paradox What is risk? Systematic risk and non-systematic risk? and What's the basic risk-reward paradox? What is risk? Systematic risk and non-systematic risk? and What's the basic risk-reward paradox?

  • Risk Free Rate and Market Risk Premium

    we have 14% = Risk free rate + 1.70*(10% - Risk free rate) or 14% = Risk free rate + 17% - 1.70*Risk free rate or 1.70*Risk free rate - Risk free rate = 17% - 14% or 0.70*Risk free rate = 3% or Risk free rate = 3%/.70 = 4.285% or 4.29%

  • Risk aversion and stocks' prices and earned rates of return

    Risk aversion: All else being equal, risk-averse investors prefer higher returns to lower returns and less risk to more risk. For any given rate of return, risk-averse investors prefer less risk.

  • Interest rate,Credit,Technology & foreign exchange rate risk

    It shows how to calculate interest rate risk, credit risk, technology risk, foreign exchange rate risk, and country or sovereign risk

  • Employee Training Program Project Risk

    Risk Monitoring Risk monitoring is an important part of risk management. It makes sure that risk responses have been implemented as planned.

  • Differentiate between two types of risk events

    443609 Differentiate between two types of risk events Phillips, J. (2010) differentiates between two types of risk events: secondary risk event is when a risk response creates a whole new risk event, and residual risks are usually tiny risk events that

  • If results from the auditor's tests of controls induce the a

    risk?

  • Strategic Financial Management

    The major areas of risk in financial management are cash flow risk, reinvestment risk, interest rate risk, purchasing power risk, currency risk, and portfolio risk.

View More Related Solutions