How is stand-alone risk calculated?

Stand-alone risk is measured by dispersion of returns about the mean and is relevant only for assets held in isolation. It consists of: Diversifiable (company-specific, unique, or unsystematic)

What are the three methods to evaluate stand-alone risk?

3. Know the methods used to calculate stand-alone risk: sensitivity analysis, scenario analysis, and break-even analysis.

What are stand-alone corporate and market risks?

Stand-alone risk•Corporate risk•Market riskStand-alone risk•The project’s total risk, if it were operated independently. Usually measured by standard deviation (or coefficient of variation). Corporate risk•The project’s risk when considering the firm’s other projects, i.e., diversification within the firm.

What is stand-alone investment?

comprised of mutual funds, segregated funds, closed-end funds, hedge funds and insurance company group segregated funds that are not wrapped or repackaged into managed assets. This category includes both short- and long-term funds. …

Is stand-alone risk Diversifiable?

“Diversifiable risk”, also known as “unsystematic risk”, also known as “company-specific risk”: part of a security’s stand-alone risk associated with unique events; can be eliminated with proper diversification. If beta = 1.0, the security is just as risky as the average stock or the overall stock market.

How do you mitigate stand-alone risk?

Standalone risk cannot be mitigated through diversification. Total beta gauges the volatility of a specific asset on a standalone basis. The coefficient of variation (CV), meanwhile, shows how much risk is associated with an investment relative to the amount of expected return.

What is Diversifiable risk in finance?

Unsystematic risk, or company-specific risk, is a risk associated with a particular investment. Unsystematic risk can be mitigated through diversification, and so is also known as diversifiable risk. Once diversified, investors are still subject to market-wide systematic risk.

What is the stand-alone risk?

Standalone risk is the risk associated with a single operating unit of a company, a company division, or asset, as opposed to a larger, well-diversified portfolio.

Which risk is Diversifiable?

Unsystematic risk
Unsystematic risk, or company-specific risk, is a risk associated with a particular investment. Unsystematic risk can be mitigated through diversification, and so is also known as diversifiable risk.

Why is some risk Diversifiable?

Some risks are diversifiable because they are unique to that asset and can be eliminated by investing in different assests. Therefore, you are unable to eliminate the total risk of an investment. Lastly, systematic risk can be controlled, but by a costly effect on estimated returns.

What is the definition of stand alone risk?

Stand Alone Risk. Standalone risk refers to the involvement of the single unit or asset of the company. The risks associated with these individual entities separately, dealing one section at a time is formally known under the perspective of standalone risk.

What is a standalone risk?

What is Standalone Risk. Standalone risk is the risk associated with a single operating unit of a company, a company division, or an area or asset , as opposed to a larger, well-diversified portfolio. Nov 18 2019

How is standalone risk measured?

A standalone risk can be measured with a total beta calculation or through the coefficient of variation, which is a measure used in probability theory and statistics that creates a normalized measure of dispersion of a probability distribution.