Quiz Ch 08 – Nile Food & Elba Eateries
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
Considering the provided information, which statement is accurate?
Considering the provided information, which statement is accurate?
What are the ideal risk metrics for an individual asset in isolation and for an asset within a diversified portfolio?
For a risk-averse investor expanding a 3-stock portfolio to 4 stocks, where the initial stocks have b = 1.0 and perfect positive correlation with the market, and potential Stocks A and B both have equilibrium expected returns of 15% and correlation r = 0.75 with the market, but differing standard deviations (12% for A and 8% for B), which stock should the investor choose to add or does the choice not impact the outcome?
Considering Stocks A and B with their characteristics and Portfolio AB ($900,000 in Stock A and $300,000 in Stock B), where the correlation is zero, which statement is accurate?
Given the data on Stocks A and B, which statement is accurate?
Given Stock A (10% expected return, 20% standard deviation) and Stock B (13% expected return, 30% standard deviation), with a 5% risk-free rate and a 6% market risk premium, and assuming equilibrium, Portfolio AB is divided 50-50. Both stocks have independent returns (zero correlation). Which statement is TRUE?
Considering the given stocks, which statement best describes the characteristics of your 2-stock portfolio?
Between Jane’s portfolio of 20 average stocks and Dick’s portfolio of 2 average stocks, considering market equilibrium, which statement is accurate?
Given Stock A (beta: 1.2, standard deviation: 25%) and Stock B (beta: 1.4, standard deviation: 20%), forming Portfolio AB with a beta of 1.25 and a standard deviation of 18%. Which statement is TRUE?
What is most likely to happen as you add randomly chosen stocks to your portfolio of 3 average stocks?