Considering investing in one of two stocks

Assignment Help Financial Management
Reference no: EM13953950

As a financial advisor, you are assigned a new client who is considering investing in one of two stocks, A or B. The table below shows information about the performance of stocks A and B last year.

Return Standard Deviation

Stock A 15 % 8.3%

Stock B 14% 2.1%

As a financial advisor, are there factors other than return and risk that should be considered in making this decision?

Based on these factors, what stock would you recommend to the client?

What reasons will you convey to your client to justify your decision in recommending this stock?

How will this recommendation impact the client?

Reference no: EM13953950

Questions Cloud

Making changes to the corporate capital structure : Mr. Hillbrandt has learned a lot about the financial side of running the business during the first year with the company and is now contemplating making changes to the corporate capital structure. He needs your assistance one more time.
Data analyst in the credit card risk-modeling department : You work for a bank as a business data analyst in the credit card risk-modeling department. Your bank recently conducted a bold experiment: over a short time interval three years ago, it quietly issued 600 credit cards to everyone who applied, regard..
What is financial engineering : The 2000s witness a dramatic increase in Financial Engineering that produced a wide range of new loans and investment products. What is Financial Engineering? Provide example of consumer loan products and investment securities.
Bid price-brokerage fees : The bid price of MassNet Corporation is 11.60 and the offer price is 12.40. Ignoring brokerage fees, an investor will have to pay $ to buy 60 of MassNet common stock directly from the dealer.
Considering investing in one of two stocks : As a financial advisor, you are assigned a new client who is considering investing in one of two stocks, A or B. The table below shows information about the performance of stocks A and B last year. What reasons will you convey to your client to justi..
How many hours should the firm hire karen per day : Karen is a trusted employee whose productivity declines as she works more and more hours each day. After careful observation of her work performance, her manager prepared the following chart. Karen's total cost to the firm is $11 per hour. Each work ..
Freely floating exchange rate system : The spot and 30-day forward rates for the Dutch guilder are $0.3075 and $0.3110, respectively. The guilder is said to be selling at a forward. All of the following are appropriate response for a U.S. exporter to appreciation of the dollar EXCEPT? In ..
Payment data of host country is useful forecasting tool : Balance of payments data of the host country is a useful forecasting tool for a foreign company because
The current price of HR Consulting common stock : The current price of HR Consulting common stock is $200 per share. Smart Brokerage Corporation charges a transaction cost of 2.5% of the total amount of a transaction. How much would an investor receive from selling 100 shares of ABC's common stock?

Reviews

Write a Review

Financial Management Questions & Answers

  Estimate a stocks expected future rate of return

Estimate a stocks expected future rate of return. This problem leaves us unsure of the true value of rs - WACC calculations should be based on the before-tax costs of all the individual capital components.

  Bond valuation-what is the coupon yield over the period

Calculate the price of a bond with 20 years remaining until it is due. The coupon rate is 7%, par value is $1000. The required return on debt is 6% (equivalent risk). What is the coupon yield over the period? What was the total return from holding fo..

  Controlling for sensitivity to the market

Suppose you believe that after controlling for sensitivity to the market, smaller firms should have higher returns. In two sentences, explain what market frictions would lead to that anomaly.

  What is the maximum dollar purchase you can make

You have $30,000 and decide to invest on margin. If the initial margin requirement is 60 percent, what is the maximum dollar purchase you can make?

  Compute the percentage change in EBIT

Use the data in the following table to compute the percentage change in EBIT that would occur if sales were to increase by10%.

  Either replace or refurbish the elevator system

You want to either replace or refurbish the elevator system in an office. Referbishing: Refurbishing the elevators will cost $55,000 and extend the life of the elevators another 20 years. Replacing the elevator system will cost $140,000, with an expe..

  The transaction is called going public

When stock in a closely held corporation is offered to the public for the first time, the transaction is called “going public,” and the market for such stock is called the new issue market. It is possible for a firm to go public and yet not raise any..

  Estimated quarterly sales for next year

Kennedy's has the following estimated quarterly sales for next year. Projected first quarter sales $11,400, second quarter $13,200, third quarter $15,800 & fourth quarter $12,700. The accounts receivable period is 70 days. What is the expected accoun..

  What is the goal of the cra

What is the goal of the CRA? How do regulators enforce its provisions?

  What would be the percentage change in price of these bonds

Both Bond Bill and Bond Ted have 10.8 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 7 years to maturity, whereas Bond Ted has 24 years to maturity. if interest rates suddenly rise by 3%, what is the percentage ..

  Ceases to withdraw funds from the account

Your uncle has $300,000 invested at 7.5%, and he now wants to retire. He wants to withdraw $35,000 at the end of each year, beginning at the end of this year. He also wants to have $25,000 left to give you when he ceases to withdraw funds from the ac..

  Evaluate the fixed overhead volume variance

calculate the Variable overhead efficiency variance and fixed overhead volume variance and overhead spending variance

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd