(e) Briefly outline why investors who fail to diversify their holdings should not be compensated for...
(e) Briefly outline why investors who fail to diversify their holdings should not be compensated for the additional risk they face.
Homework Answers
Diversification is a method to eliminate unsystematic risk from the portfolio. It is done by adding stocks to the portfolio, especially those stocks with a low or negative correlation to the existing stocks in the portfolio.
Diversification is easily done by adding new stocks to the portfolio. It does not involve any cost. Failing to diversify is an avoidable risk which need not be taken by investors. Hence, they should not be compensated for bearing the additional risk.
Add Answer to:
(e) Briefly outline why investors who fail to diversify their
holdings should not be compensated for...
Which risk(s) are investors traditionally compensated for if the markets are in equilibrium, and why? If...
Which risk(s) are investors traditionally compensated for if the markets are in equilibrium, and why? If you are an undiversified investor, with a higher than average level of ris aversion, are you systematically over-paying for your investments, and why?
Why do investors diversify their portfolios? How many stocks do you have to own before you...
Why do investors diversify their portfolios? How many stocks do you have to own before you have a diversified portfolio? Is it true all risk can be diversified away?
Should Starbucks further diversify, or not (explain why)? Additional acquisitions?
Should Starbucks further diversify, or not (explain why)? Additional acquisitions?
explain who should be concerned with a company’s financial statements and why they are important other...
explain who should be concerned with a company’s financial statements and why they are important other than investors
how and why should the process of risk analysis be different for an investor who was...
how and why should the process of risk analysis be different for an investor who was simply trying to determine which stocks to add to a well- diversifieed portfolio?
Identify and briefly discuss 2 key issues raised in "Why not 100 percent equities?" by Clifford...
Identify and briefly discuss 2 key issues raised in "Why not 100 percent equities?" by Clifford Asness. (8 pts) In a 1994 article "College and University Endowment Funds! Why Not 100% Equities?" Richard H. Thaler and J. Peter Williamson presented strong evidence documenting the historical superiority of investing in 100% equities compared with a more common investment policy of 6096 equities and 40% bonds (60/40). However, their recommendation that endowments invest in 100% equities actually mixes two distinctly different ideas:...
Which of the six risks should be considered a significant risk? Explain why they represent a...
Which of the six risks should be considered a significant risk? Explain why they represent a significant risk. For each risk that you identified as a significant risk, describe how you might address the risk to give it special audit consideration. For example, a valuation risk might be addressed by engaging a valuation specialist. Begin by determining which of the six risks should be considered a significant risk. Then, for each risk that has been identified as a significant risk,...
Solve for part b and e People who eat lots of fruits and vegetables have lower...
Solve for part b and e
People who eat lots of fruits and vegetables have lower rates of colon cancer than those who eat little of these foods. Fruits and vegetables are rich in "antioxidants" such as vitamins A, C, and E. Will taking antioxidants help prevent colon cancer? A medical experiment studied this question with 864 people who were at risk of colon cancer. The subjects were divided into four groups: daily beta-carotene, daily vitamins C and E, all...
Part IIl. Professional Communication Skills/E tment Analysis Skills/Essays/Selective Topics Total Score: 15 Points Select any four essays from the list of topies below and answer Answer each ques...
Part IIl. Professional Communication Skills/E tment Analysis Skills/Essays/Selective Topics Total Score: 15 Points Select any four essays from the list of topies below and answer Answer each question in detail. Use Business English. Each essay is worth 3.75 points) them in the blue book attached Each essay's answer should contain the three parts: 1. Brief introduction 2. Main/detail explanation 3. Brief summary/conclusion 1. Why do financial their meaning. analysts and investors use financial ratios? Classify financial ratios and describe 2....
Health Behaviors Based on ar0cle by Krueger and Chang 2008 AJPH Ar0cle Outline • This is...
Health Behaviors Based on ar0cle by Krueger and Chang 2008 AJPH Ar0cle Outline • This is an empirical research ar0cle that follows a rela0vely standard outline – Literature review: background info on what is already known about the topic from previous studies and/or theory – Data and methods: detailed descrip0on of how the authors did the study – Results: the findings of the study – Conclusion/Discussion: where the authors recap the main findings and put them into the context of...
Identify and briefly discuss 2 key issues raised in "Why not 100 percent equities?" by Clifford Asness. (8 pts) In a 1994 article "College and University Endowment Funds! Why Not 100% Equities?" Richard H. Thaler and J. Peter Williamson presented strong evidence documenting the historical superiority of investing in 100% equities compared with a more common investment policy of 6096 equities and 40% bonds (60/40). However, their recommendation that endowments invest in 100% equities actually mixes two distinctly different ideas:...
Solve for part b and e
People who eat lots of fruits and vegetables have lower rates of colon cancer than those who eat little of these foods. Fruits and vegetables are rich in "antioxidants" such as vitamins A, C, and E. Will taking antioxidants help prevent colon cancer? A medical experiment studied this question with 864 people who were at risk of colon cancer. The subjects were divided into four groups: daily beta-carotene, daily vitamins C and E, all...
Part IIl. Professional Communication Skills/E tment Analysis Skills/Essays/Selective Topics Total Score: 15 Points Select any four essays from the list of topies below and answer Answer each question in detail. Use Business English. Each essay is worth 3.75 points) them in the blue book attached Each essay's answer should contain the three parts: 1. Brief introduction 2. Main/detail explanation 3. Brief summary/conclusion 1. Why do financial their meaning. analysts and investors use financial ratios? Classify financial ratios and describe 2....
Most questions answered within 3 hours.
-
we discussed a number of factors in the "General (remote)
Environment" that can affect the...
asked 9 minutes ago -
Using the IS-PC-MR model, describe how the economy responds to
an inflation shock in the following...
asked 10 minutes ago -
Ammonium nitrate has been used as a high explosive because it is
unstable and decomposes into...
asked 15 minutes ago -
How long would it take a car with a top speed of 203 mph to travel...
asked 13 minutes ago -
9) What are the two different ways in which a user can interact
(interface/work) with UNIX?...
asked 18 minutes ago -
Exercise 2.5. Use the Binomial Theorem to prove that, for all n
≥ 0 and for...
asked 34 minutes ago -
The teachers at Bryan ISD want to examine if a newly developed
intervention program for disadvantaged...
asked 39 minutes ago -
Describe the
characteristics of small business.
- Name the most
common causes of small business failure....
asked 42 minutes ago -
A pendulum is made up of a small sphere of mass 0.500 kg
attached to a...
asked 1 hour ago -
Given a pn junction with both thin p-type and n-type materials
such that Wn and Wp...
asked 1 hour ago -
it was discussed that animals should be treated the same as
humans, that pain is pain,...
asked 1 hour ago -
The vapor pressure of water at 20°C is 17.54 torr. Calculate the
vapor pressure (in torr)...
asked 1 hour ago