Why would I hold a zero beta stock in my portfolio? Some Background In class we wondered why you would hold a zero beta stock, that is a stock that has the same expected return as the risk free rate yet has its return is uncertain, but the risk free return is certain. The only way you would in fact hold such a stock is if it gave you something the risk free return did not give you. I said this was because this stock provided diversification, and this example illustrates this point. Before I work
Words: 485 - Pages: 2
answer the following questions. State of Economy Probability T-Bills Alta Inds. Repo Men American Foam Market Port. 2-Stock Portfolio Recession 0.1 8.00% -22.00% 28.00% 10.00% -13.00% 3.00% Below Average 0.2 8.00% -2.00% 14.70% -10.00% 1.00% Average 0.4 8.00% 20.00% 0.00% 7.00% 15.00% 10.00% Above Average 0.2 8.00% 35.00% -10.00% 45.00% 29.00% Boom
Words: 2568 - Pages: 11
follows: Asset A has a standard deviation of 20% while asset B has a standard deviation of 30%. The standard deviation of a portfolio consisting of an equal weighting of Asset A and Asset B is: A. 50% B. 25% C. 75% D. 20% Question 3 The standard deviations of two assets are 10 and 20 percent respectively. If an equally weighted portfolio produced a portfolio with a standard deviation of 14%, we can deduce regarding the two assets are: A. negatively correlated B. perfectly
Words: 2607 - Pages: 11
of that portfolio we made from these stores. We had the capacity infer that our portfolio was nearly identified with the business sector development as indicated by the discoveries according to the Sharpe Ratio, Treynor measure and the beta of our portfolio. To get a brighter picture we thought about the consequences of these estimations of our portfolio with the S&P 500 every day returns and contrasted the outcomes with show signs of improvement comprehension of where our portfolio stood contrasted
Words: 1505 - Pages: 7
passively manage my portfolio for a number of reasons. The first reason was in order to minimize trading costs and therefore increase overall real return of my portfolio. The second reason was that finding mispriced securities is a hard task to undertake, and therefore would increase the volatility of your returns. Since I don’t have previous trading experience, I would be taking a risk by trying to outperform the market. For that reason, I decided to passively hold the indexed portfolio. My third reason
Words: 1381 - Pages: 6
Risk and Return Tradeoff Memo Analyzing the risk and return tradeoffs associated with Casa Bonita’s portfolio Diversity is an important part of any portfolio; diversity in the industries chosen for investment and in the level of risk undertaken are the two most important factors when considering how to construct a corporate investment portfolio.(3) Casa Bonita is a growing company and it is important that we invest our capital wisely if we are planning to use the gains to fund expansion and
Words: 742 - Pages: 3
A portfolio investment, unlike individual security selection employs a systematic investment approach that is supported to benefit the owner of the investment portfolio in the long run. The level of expected return and risk tolerance are assessed so that different weights can be assigned to different assets classes and categories. Holding a portfolio is less risky than the lowest risk individual share because it is possible to select stocks whose individual performance is independent of other investments
Words: 597 - Pages: 3
1. How should Johnathan describe the rationale of the devidend discount model (DDM) and demonstrate its use in calculating the justifiable price of common stock? Mô hình DDM, hay mô hình chiết khấu dòng cổ tức là một phương pháp phổ biến để xác định giá trị cổ phiếu. Bởi vì, giá trị cổ phiếu thực tế là giá trị hiện tại của tất cả các dòng tiền cổ tức tương lai mà nó hy vọng được cung cấp. Cho dù nhà đầu tư bán được cổ phiếu với giá cao hơn giá mua để sinh lời thì cái thực sự mà họ bán cũng chính
Words: 992 - Pages: 4
item portfolio incorporates home decorations, washroom and room items, pads and floor covers, indoor and outside furniture, cultivating frill, wearing products, wellness related types of gear, donning attire, footwear and other related stock. Notwithstanding that, the organization gives different administrations including home delivery, blessing card plans, guarantee upkeep administrations and eCommerce.(briscoes, 2015). 3. Environmental Analysis 3.1 Macro-environmental (PESTLE) analysis
Words: 294 - Pages: 2
OBJECTIVES / RESEARCH METHODS: The main objective of this study was to use two dividend-paying stocks to see how much we should invest in them to create the most optimized portfolio between the two companies. For this study we decided to use two of the major leaders in their respective sectors, Wal-Mart in consumer staples, and Microsoft in technology. We began by collecting the monthly closing stock prices with dividends incorporated over the last 61 months for Wal-Mart, Microsoft, and the S&P
Words: 682 - Pages: 3
