Non-Symmetric Risk Explained
Non-symmetric risk, in the context of the provided options, refers to a risk that can be managed effectively through diversification.
- Option 1: "A risk that can be eliminated by diversifying." This aligns with the definition where non-symmetric risk is treated as diversifiable risk (also known as unsystematic risk or specific risk). By holding a variety of assets, the negative impact of a specific risk affecting one asset can be offset by other assets.
Why Other Options Are Incorrect
- Option 2: "A risk that cannot be eliminated by diversifying." This describes systematic risk (market risk), which is generally considered the opposite of what Option 1 describes.
- Option 3: "A risk that can be eliminated without diversifying." This is incorrect as diversification is the primary method mentioned for eliminating this type of risk.
- Option 4: "A risk that cannot be eliminated." This is too broad and is similar to the definition of systematic risk, not the one corresponding to the correct answer.
Conclusion
Based on the provided correct answer, non-symmetric risk is understood as a risk inherent to specific assets or industries that can be reduced or eliminated by spreading investments across various assets through diversification.
Important Questions from Microeconomics
Which of the following statement is correct?
I. Indifference curves are sloping from left to right.
II. Higher indifference curve gives a higher level of utility.
If in a production process, all inputs are tripled, which of the following statements follows?
I. If the output is tripled, then decreasing returns to scale apply.
II. When the output is doubled, constant returns to scale apply.
III. If the output is more than tripled, then increasing returns to scale apply.
When it is not possible to make someone good without harming someone, then such a situation is called
According to Ricardo what condition is necessary to make possible international trade between two countries?
Match List I with List II:
List- I
Shape of revenue curve of the firm
List – II
Market structure
A.
Kinked revenue-curve (I)
Monopolistic competition B.
Infinitely elastic straight line curve (II)
Perfect competition C.
Relatively less elastic curve (III)
Oligopoly D.
Relatively high elastic curve (IV)
Monopoly.
Choose the correct answer from the options given below -
