Question

You are considering investing in one of the these three
stocks:

Stock |
Standard Deviation |
Beta |

E |
21% |
0.58 |

L |
9% |
0.67 |

G |
12% |
1.30 |

If you are a strict risk minimizer, you would choose Stock ____ if
it is to be held in isolation and Stock ____ if it is to be held as
part of a well-diversified portfolio.

Answers: One is correct

E; L.

G; E.

E; E.

L; E.

L; L.

Answer #1

The answer is as follows:

You are considering investing in one of the these three
stocks:
Stock
Standard Deviation
Beta
A
10%
1.59
B
12%
0.61
C
14%
1.29
A
10%
1.59
B
12%
0.61
C
14%
1.29
If you are a strict risk minimizer, you would choose Stock ____
if it is to be held in isolation and Stock ____ if it is to be held
as part of a well-diversified portfolio.You are considering
investing in one of the these three stocks:

You have developed the following data on three stocks: Stock A
has a standard deviation of .15 and a Beta of .79. Stock B has a
standard deviation of .25 and a Beta of .61. Stock C has a standard
deviation of .20 and a Beta of 1.29. If you are a risk minimizer,
you should choose Stock _____ if it is to be held in isolation and
Stock _____ if it is to be held as part of a...

You are considering investing in on of the following stocks:
Stock A has a beta of 1.29 and a standard deviation of 20%, Stock B
has a beta of 0.61 and a standard deviation of 10%, and Stock C has
a beta of 0.59 and a standard deviation of 12%. If you are a risk
averse investor, you would choose Stock _____ and Stock ______ if
it is to be held as part of a well-diversified portfolio.
C; B
A;...

Suppose you collect the information of two
stocks:
Expected Return
Standard Deviation
Beta
Stock A
13%
15%
1.6
Stock B
9.2%
25%
1.1
a. If you have a well-diversified portfolio of 50 stocks and you
are considering adding either Stock A or B to that portfolio, which
one is a riskier addition and why?
If you are a new investor looking for your first stock investment,
which is a riskier investment for you and why?
b. If the...

You have research the following three stocks, Stock A : STD 20%,
B =1.1; Stock B : STD 30%, B =0.9; Stock C : STD 15%, B = 1.
If you wanted to reduce the risk you held in isolation you would
choose stock .
If you wanted to reduce the risk you held as part of a
diversified portfolio, you would hold stock .

You have analyzed four stocks and obtained the following
results:
Stock
Return
Standard
Beta
K 22% 35% 2.8
I 10% 17% 0.8
N 8% 15% 0.2
G 10% 13% 0.5
Refer to the information above. A risk-averse investor, who will
be adding the stock to his already well-diversified portfolio,
would choose to invest in Stock
A) K
B) I
C) N
D) G

Which one of these statements related to beta is correct?
A. The beta of a risk-free security is set at 1.
B. The higher the beta, the lower the risk of a security.
C. Beta measures the risk of a single security if held in a
large, diversified portfolio.
D. Beta measures the total risk of a single security whether
held independently or as part of a portfolio.
E. A stock with a high standard deviation will also have a...

You are considering investing in one of two stocks. Stock A has
a higher Sharpe ratio than Stock B, but Stock B has a higher
Treynor ratio than Stock A. What is the difference between the two
ratios? Under what circumstances would you choose Stock A and under
what circumstances would you choose Stock B?

Suppose stocks offer an expected rate of returns of 10% with a
standard deviation of 20%, and gold offers an expected return of 5%
with a standard deviation of 25%. (i) If the correlation between
gold and stocks is sufficiently low, gold ______ be held as a
component in the optimal portfolio. (ii) If the correlation
coefficient between gold and stocks is 1.0, then gold ______ be
held as a component in the optimal
portfolio.
Question 1 options:
A)
(i)...

Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the
following statements must be true, assuming the CAPM is
correct.
a. Stock A would be a more desirable addition to a portfolio
then Stock B.
b. Stock B would be a more desirable addition to a portfolio
than A.
c. When held in isolation, Stock A has more risk than Stock
B.
d. In equilibrium, the expected return on Stock B will be
greater than that...

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