Question

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:

Answer #1

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

This is because stock A has the least standard deviation out of all three and in isolation risk is measured by standard deviation of stocks

And as part of a well diversified portfolio , risk is measured by beta of stock , hence to minimize risk in a portfolio , a stock with the lowest beta will be chosen which is stock B in this case.

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.

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;...

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 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 .

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...

QUESTION 4
You are considering investing either of the three stocks- A, B
and C. The following table provides the information regarding the
stocks
Returns (in percent)
Probability
Stock A
Stock B
Stock C
0.20
2
-3
5
0.50
10
8
8
?
15
20
12
Based on the above information
Calculate the expected rate of returns and variance for each of
the three stocks?
Calculate the coefficient of variation for each
security?
c) Your friend suggests you...

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

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)...

You have the following data on three stocks:
Stock
Expected Return
Beta
A
12%
0.6
B
14%
1.2
C
9%
1.0
In a declining stock market, which stock would have the least
amount of expected loss?
A.
Stock B
B.
Can't be determined with the information given.
C.
Stock C
D.
Stock A

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