Some risk can be mitigated by diversifying

Assignment Help Financial Management

Reference no: EM131062865

We are learning that some risk can be mitigated by diversifying. In a portfolio of stocks, we simply buy stocks from lots of companies in different industries. What about poor Kelly. What can she do to avoid be crippled by some of the unsystematic risks that you have identified? How can she diversify? Be creative; I know she has a small business, but she faces the same issues that even the big companies face

Reference no: EM131062865

Questions Cloud

Dividend is expected to grow at rate-stock required return : A stock is currently priced at $37.40. Its dividend is expected to grow at a rate of 6.80% per year indefinitely. The stock's required return is 9.70%. The stock's predicted price 5 years from now, P5, should be $________.

Annual expense ratio is netted out of the funds return : You purchased 5,400 shares in the New Pacific Growth Fund on January 2, 2010, at an offering price of $63.90 per share. The front-end load for this fund is 5 percent, and the back-end load for redemptions within one year is 2 percent. what is your to..

Unlimited liability for the obligations of their business : The liability of those who own a corporation is limited to their investment, while proprietors and general partners have unlimited liability for the obligations of their business. Explain what relevance this has for risk management.

Use future worth analysis with equal lives assumption : A company is deciding on investing in one of two mutually exclusive pieces of equipment: Equipment A and Equipment B. If the firm expects a 8% per year return on investment, which of the following alternatives should they choose. Explain. Use future ..

Some risk can be mitigated by diversifying : We are learning that some risk can be mitigated by diversifying. In a portfolio of stocks, we simply buy stocks from lots of companies in different industries. What about poor Kelly. What can she do to avoid be crippled by some of the unsystematic ri..

Stock is expected to pay its first dividend in the amount : A stock will pay no dividends for the next 3 years. Four years from now, the stock is expected to pay its first dividend in the amount of $2.10. It is expected to pay a dividend of $2.60 exactly five years from now. The dividend is expected to grow a..

What is your best estimate of the return of the asset : You have found an asset with a 13.20 percent arithmetic average return and a 10.36 percent geometric return. Your observation period is 30 years. What is your best estimate of the return of the asset over the next 5 years? 10 years?

Stock is expected to pay the dividends : A stock is expected to pay the following dividends: $1.00 4 years from now, $1.65 5 years from now, and $1.95 6 years from now, followed by growth in the dividend of 7% per year forever after that point. The stock's current price (Price at year 0) sh..

The variances and standard deviations for cherry and straw : The rate of return on Cherry Jalopies, Inc., stock over the last five years was 16 percent, 11 percent, -1 percent, 6 percent, and 11 percent. Over the same period, the return on Straw Construction Company’s stock was 16 percent, 23 percent, -6 perce..

User Account

All Pages