1. Diversification cannot reduce the portfolio risk if you invest different stocks in the same industry. ...
1. Diversification cannot reduce the portfolio risk if you invest different stocks in the same industry. Why? Explain. Diversification reduces the portfolio risk if you invest different stocks in the different industries. Why? Explain.
2. If you would like to form your stock investment
portfolio, (1) how many stocks would you include in the portfolio,
and (2) what are these stocks (companies) in the portfolio.
Explain why you choose these companies.
Homework Answers
1. Diversification cannot reduce the portfolio risk if you invest different stocks in the same industry because there is a high correlation among the stocks within the same industry and systematic risk. Diversification reduces the portfolio risk if you invest different stocks in the different industries because generally the correlation is low among the stocks of different industries.
2. Stock investment portfolio. The number of stocks - 05. Name of stocks - Tesla Inc, Amazon, Apple, Pfizer, Shell. These stock have low correlation with each other. These are bluechip companies.
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1. Diversification cannot reduce the portfolio risk if
you invest different stocks in the same industry. ...
The graph shows the relationship between risk, measured as the standard deviation of a stock portfolio's return, and the number of different stocks in the portfolio for a hypothetical stock market.
6. Diversification and riskThe graph shows the relationship between risk, measured as the standard deviation of a stock portfolio's return, and the number of different stocks in the portfolio for a hypothetical stock market.True or False: Increasing the number of stocks in a portfolio reduces market risk.TrueFalseConsider two stock portfolios. Portfolio A consists of four different stocks from firms in different industries. Portfolio B consists of 10 different stocks, also from firms in different industries. The return on Portfolio A...
Diversification and risk The graph shows the relationship between risk, measured as the standard deviation of a stock po...
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required rate of return is the risk-free rate of return plus a risk
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I ONLY CAN SHOW ONE OPTIONS OF THEM 7. Using historical data to measure portfolio risk...
I ONLY CAN SHOW ONE OPTIONS OF THEM
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1. You are working in a financial intermediary and your manager asks you to analyze stocks of two different companies trading on Borsa İstanbul. The first company is called R&H Inc. (RHI) and the second company is called M&L Corp. (MLC). Both of these companies are in consumer's goods industry and founded at the beginning of the 20th century. You do not know what the returns on these company stocks will be for the next year but you have some...
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required rate of return is the risk-free rate of return plus a risk
premium that reflects only the risk remaining diversification. Most
individuals hold stocks in portfolios. The risk of a stock held in...
I ONLY CAN SHOW ONE OPTIONS OF THEM
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