Homework Answers
Lower the diversification ratio lower the correlation ratio ,
hence the standard deviation gets reduces to provide the benefits
of diversifcation .Diversification means reducing the risk or
standard deviation of portfolio. The lowering of standard deviation
can be understood by using the following formula.
Standard Deviation = ((Weight of A * Standard Deviation of
A)2 + (weight of B* standard Deviation of B)2
+ 2* Weight of A * Standard Deviation of A * weight of B * standard
Deviation of B * correlation)0.5
As per above equation lower the diversification or correlation ratio lower will be standard deviation and higher will be benefits of diversification .
Add Answer to:
can you explain why the lower the diversification ratio, the
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Please help, I thought it was true because the Neutron to Proton ratio is 1. Maybe...
Please help, I thought it was true because the Neutron to Proton
ratio is 1. Maybe I'm missing something. Please help and thank
you.
162Tl is expected to be stable. Selected Answer: Correct Answer: B. True A. False
I know the answer is C, but can someone explain why it is C? I thought...
I know the answer is C, but can someone explain why it is C? I
thought the answer was A, where does the extra Oxygen come from in
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Table sugar is (+)-sucrose. Which of these products forms as the result of enzymatic or acid-catalyzed test-tube hydrolysis?
Statement True False Because of the effects of diversification, the portfolio's risk is likely to be...
Statement True False Because of the effects of diversification, the portfolio's risk is likely to be more than the average of all stocks' standard deviations. The unsystematic risk com ponent of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio. A portfolio's risk is likely to be smaller than the everage of all stocks' standard deviations, because diversification lowers the portfolio's risk. Portfolio risk will increase if more stocks that are negatively correlated with...
Does random diversification increase or decrease the variance of a portfolio? What role do events play...
Does random diversification increase or decrease the variance of a portfolio? What role do events play in the actual return of a portfolio? Is this statement true – “if the event is expected, it is already reflected in the stock price”? Explain. What risk can be diversified away? Beta measures what form of risk? If you have a three stock portfolio and all three stock have betas of 2.0 or more what is the beta of the portfolio? Less than...
The answer for this question is d; however, I thought it was c. Can someone explain...
The answer for this question
is d; however, I thought it was c. Can someone explain why the
answer is d and not c?
15) Which equipotential surfaces better correspond to this electric field? E 40 V 0 V 0 V 40 V 0 V 40 V 0 V 40 V 40 V O V 40 V O V
QUESTION 18 Which of the following statements is CORRECT? 1. An investor can eliminate virtually all...
QUESTION 18
Which of the following statements is CORRECT?
1.
An investor can eliminate virtually all diversifiable risk if
he or she holds a very large, well-diversified portfolio of
stocks.
2.
Once a portfolio has about 40 stocks, adding additional stocks
will not reduce its risk by even a small amount.
3.
It is impossible to have a situation where the market risk of
a single stock is less than that of a portfolio that includes the
stock.
4.
An...
can you give me the answer and explain why?also can you explain why B is incorrect....
can you give me the answer and explain why?also can you explain
why B is incorrect. thx
21. Which of the following is an attribute of the corporate form of business ownership? Unlimited liability. Higher tax rates. Limited resources. Difficulty in transferring ownership. None of the choices are correct.
Why is the answer false? I thought that once a price ceiling has been established, you...
Why is the answer false?
I thought that once a price ceiling has been established, you
can only buy goods at lower prices.
I'm confused.
A binding price ceiling allows consumers to buy any quantity of the good they demand at a lower price. True or false? - Answer is False (price ceiling range cannot be accessed by consumers)
The standard deviation can be thought of as the average error. Please explain why this is...
The standard deviation can be thought of as the average error. Please explain why this is true.
Please help, I thought it was true because the Neutron to Proton
ratio is 1. Maybe I'm missing something. Please help and thank
you.
162Tl is expected to be stable. Selected Answer: Correct Answer: B. True A. False
I know the answer is C, but can someone explain why it is C? I
thought the answer was A, where does the extra Oxygen come from in
C?
Table sugar is (+)-sucrose. Which of these products forms as the result of enzymatic or acid-catalyzed test-tube hydrolysis?
Statement True False Because of the effects of diversification, the portfolio's risk is likely to be more than the average of all stocks' standard deviations. The unsystematic risk com ponent of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio. A portfolio's risk is likely to be smaller than the everage of all stocks' standard deviations, because diversification lowers the portfolio's risk. Portfolio risk will increase if more stocks that are negatively correlated with...
The answer for this question
is d; however, I thought it was c. Can someone explain why the
answer is d and not c?
15) Which equipotential surfaces better correspond to this electric field? E 40 V 0 V 0 V 40 V 0 V 40 V 0 V 40 V 40 V O V 40 V O V
QUESTION 18
Which of the following statements is CORRECT?
1.
An investor can eliminate virtually all diversifiable risk if
he or she holds a very large, well-diversified portfolio of
stocks.
2.
Once a portfolio has about 40 stocks, adding additional stocks
will not reduce its risk by even a small amount.
3.
It is impossible to have a situation where the market risk of
a single stock is less than that of a portfolio that includes the
stock.
4.
An...
can you give me the answer and explain why?also can you explain
why B is incorrect. thx
21. Which of the following is an attribute of the corporate form of business ownership? Unlimited liability. Higher tax rates. Limited resources. Difficulty in transferring ownership. None of the choices are correct.
Why is the answer false?
I thought that once a price ceiling has been established, you
can only buy goods at lower prices.
I'm confused.
A binding price ceiling allows consumers to buy any quantity of the good they demand at a lower price. True or false? - Answer is False (price ceiling range cannot be accessed by consumers)
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