A specific stock is risky right now due to idiosyncratic risk. Which is the closest synonym for the word idiosyncratic? There is no single word that is a perfect synonym for "idiosyncratic," but some close options include "unpredictable," "unusual," "unconventional," and "individual."
Is idiosyncratic risk priced?
There is no definitive answer to this question, as it depends on a number of factors, including the specific asset in question and the market conditions at the time. However, in general, idiosyncratic risk is not as well-priced as systematic risk, as it is more difficult to model and predict. This means that investors may be willing to pay a premium for assets with low levels of idiosyncratic risk. How does CAPM measure risk? The Capital Asset Pricing Model (CAPM) is a model used to calculate the expected return of an investment based on its beta and the expected return of the market.
The market risk premium is the expected return of the market minus the risk-free rate. The market risk premium is used in the CAPM formula to calculate the expected return of an investment.
The beta of an investment is a measure of the volatility of the investment's returns relative to the market. A beta of 1 means that the investment's returns are in line with the market. A beta of less than 1 means that the investment is less volatile than the market, and a beta of greater than 1 means that the investment is more volatile than the market.
The expected return of an investment is equal to the risk-free rate plus the beta of the investment times the market risk premium.
The CAPM formula is:
Expected return = Risk-free rate + Beta x (Expected return of the market - Risk-free rate)
The risk-free rate is the return on an investment with no risk. The expected return of the market is the average return of the market over time.
The CAPM formula can be used to calculate the expected return of an investment with a given beta. It can also be used to calculate the beta of an investment with a given expected return.
What is CAPM and beta? The Capital Asset Pricing Model (CAPM) is a model used to determine the expected return of an asset based on its risk. The model takes into account the asset's beta, which is a measure of the asset's volatility in relation to the market.
The CAPM formula is as follows:
Expected return = Risk-free rate + Beta (Market return - Risk-free rate)
The risk-free rate is the return on an investment with no risk. The market return is the return on a market index, such as the S&P 500.
Beta measures the volatility of an asset in relation to the market. A beta of 1 means that the asset's price will move with the market. A beta of less than 1 means that the asset is less volatile than the market. A beta of greater than 1 means that the asset is more volatile than the market.
The CAPM model is used to price assets and to compare the expected returns of different assets. It is a popular model among financial analysts and investors.
What is an example of idiosyncratic reaction?
An idiosyncratic reaction is a reaction that is not dose-related and is not predicted by the known pharmacological properties of the drug. It is an uncommon reaction that occurs only in a small number of people.
For example, a person who is taking a new medication may experience an idiosyncratic reaction. This reaction may not be related to the dosage of the medication, and it may not be something that is normally seen with this medication. Idiosyncratic reactions can range from mild to severe, and in some cases, they can be life-threatening.