Reference no: EM133186392

1. Diversified Risk Stock Portfolio

For this case study, you will create a portfolio of five to eight stocks that demonstrate diversified risk. List the stocks along with their current price and previous 1-year and 5-year rates of return. Below the list of stocks, address the issues described below.

- Explain the difference between portfolio risk and stand-alone risk.

- Briefly explain why you selected each stock and how this investment portfolio would have less risk than selecting just one stock.

- How does risk aversion affect a stock's required rate of return?

- Explain the distinction between a stock's price and its intrinsic value.

Your case study should be at least two pages in length, not counting the title and reference pages. You are required to cite and reference at least your textbook and stock data source. Use APA format to cite in-text and reference citations.

2. Capital Investment

For the purpose of this assignment, a project is defined as any endeavor that had a capital outlay. Pick a project you have recently completed or one you would like to complete in the near future. This could be a project in your home, place of work, or even church or other organization with which you are familiar. Respond to the prompts below.

Introduce your project with a reflection on the importance of selecting the right projects in which to invest capital. Do we always select those projects that have the highest return on investment (ROI)?

Describe the relationship between risk and return and how you would measure for both in your project. What other factors play into capital budgeting decisions?

Explain how you would calculate the weighted average cost of capital (WACC) and its components for your project.