Reduce the riskiness of a portfolio of stocks

Assignment Help Finance Basics
Reference no: EM133112520

-Which of the following is INCORRECT? (Explain why each correct answer is correct and why each incorrect answer is incorrect).

-Diversification will normally reduce the riskiness of a portfolio of stocks.

-This is correct because

-Risk-averse investors require higher rates of return on investments whose returns are highly uncertain, and most investors are risk averse

-This is correct because

-In portfolio analysis, we often use ex post (historical) returns and standard deviations, despite the fact that we are really interested in ex ante (future) data

-This is correct because

-The tighter the probability distribution of its expected future returns, the greater the risk of a given investment as measured by its standard deviation.

-This is incorrect because

-In general, investors are not compensated for holding diversifiable risk in their portfolios.

-This is correct because

Reference no: EM133112520

Questions Cloud

Between venture capital contracts in china and us : What are the differences between venture capital contracts (term sheets) in China and the US? following aspects should be involved: Type of security (preferred
Use of fertility drugs and ovarian cancer : Stanford University medical researchers conducted a study on the correlation between the use of fertility drugs and ovarian cancer.
Finance the entire purchase price : When Daysa graduates from college next week, he plans to buy a new car that costs $37,000. He will finance the entire purchase price with an automobile loan fro
Advise lily of the tax consequences of the events : Lily also received $30,000 to give up her local distribution rights for 'Classical Software', Advise Lily of the tax consequences of the above events
Reduce the riskiness of a portfolio of stocks : -Which of the following is INCORRECT? (Explain why each correct answer is correct and why each incorrect answer is incorrect).
Current and develop new work plans and allocate work : Current and develop new work plans and allocate work to achieve outcomes efficiently and within organisational and legal requirements
Improve communication for both customers and employees : Discuss ways to improve communication for both customers and employees, including proposing a new theory to better suit the situation.
Calculate the percentage yield to maturity of a coupon bond : Calculate the percentage yield to maturity of a coupon bond face value $20, 000, purchased for $12000.00 with a coupon rate of 8% per annum
What is the beta of the portfolio : In your portfolio, you have two stocks. You have a 50% investments in Stock A and 50% investment in Stock B. Stock A has a standard deviation of 25% and a beta

Reviews

Write a Review

Finance Basics Questions & Answers

  Would you recommend that alison nelson franchise the chocola

Would you recommend that Alison Nelson franchise The Chocolate Bar within the United States? Explain your answer.

  What is the bond real rate of return today

You just learned that a blue chip company will issue a bond with a maturity of 30 years. The bond appears to be a good deal because it yields 3.5 percent. Assuming that the infaltion rate stays at 3 percent, what is the bond's real rate of return ..

  Calculate the payments for options

GenTech Ltd needs to save $50 million to expand its production lines in six years' time. There are three investment options to consider:

  Income statement information for battus corporation is

income statement information for battus corporation is provided below.sales680000gross profit231200net

  Plot the growth in investment

Plot the growth in your investment, assuming you invested $1,000 in 1900, in each of three possible assets (stocks, treasury bonds, or treasury bills)

  Compare the calculated financial ratios against the industry

Calculate the financial ratios for the assigned company's financial statements, and then interpret those results against company historical data as well as industry benchmarks:

  What is the present value of annuity today

An annuity will pay $1000 per year for 10 years, starting five years after today. What is the present value of this annuity today, given that the interest rate

  Change in labor productivity

What is the amount of variance that is attributed to the change in labor productivity? Use the following data to calculate the variances.

  The required return on stock 13 and sells currently for 76

eva corp. experience rapid growth. dividends are expected togrow at 25 per year during the next three years 15

  Computation of cost of capital and beta

Computation of cost of capital and beta and explain Does it matter if you use the beta for Dell or the beta for the industry in this case

  What is john total us dollar final net position

Consider these data points. We are in October of 2021. We know that the December 2021 coffee futures contract is trading at 180. We also know that John, a coffe

  What will the balance be in the account

Mary has a credit card balance of $4, 300 at an APR of 12% compounded monthly. Mary has elected to make interest only payments each month.

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