ally possible to reduce the risk of investing in the stock market by buying a wide range of stockS* A. True
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It is usually possible to reduce the risk of investing in the stock market by buying a wide range of stockS*
A. True
B. False
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- As an investor, how well do you think you could handle thevolatility of the stock market, knowing that the value of your investments could dropdramatically from time to timeIn a few sentences, answer the following question as completely as you can. You are discussing stock valuation techniques with your broker. You mention that your Finance professor stated that “a stock that will never pay a dividend is valueless.” Your broker says this is not true because you can always sell the stock to someone else (thus, a capital gain is possible) a share of stock represents a share of ownership in something tangible (i.e., the issuing firm).Argue for or against your broker’s position.1. What effect does increasing inflation expectations have on the required returns of investors in common stock? 2. Explain the specific relationship between risk and reward and why this relationship must be true.
- Let's explore the difference between "expected" and "actual" return of a stock. 1) How might we calculate what the expected return of a stock should be? 2) How might we calculate the "actual" return of a stock?When you invest your money in the Stock Market, the original investment is called theYou are a portfolio manager for a wealthy individual who is interested in investing in the stock market. The individual is risk-averse and wants to maximize returns while minimizing risk. Which of the following asset classes would be most appropriate for a well-diversified portfolio? Stocks only Bonds only A mix of stocks, bonds, and other asset classes Real estate only
- 15. Why do investors invest in stocks? i. Wide range of choices ii. Easy to monitor iii. high return without risk iv. Managed by professional managers A. 1,i and ii B. I,iii and iv C. I, ii and iv D. All of the aboveplease answer both. If a stock's fair return increases, what will happen to the stock's value? A. It will increase. B. It will not change. C. It will decrease. If the market risk premium rises, what will happen to the stock's price? A. It will not change. B. It will increase. C. It will decrease.Microsoft is the only stock in your portfolio. To reduce the risk you decide to add another stock in your portfolio. In fact you pick another stock that has a correlation coefficient of 1 with Microsoft. Which risk do you reduce by adding the second stock to your portfolio? O A. Systematic risk O B. Company specific risk O C. Risk free rase risk O D. Technology risk OE. None of the above
- If the intrinsic value of a stock is greater than its market value, which of the following is a reasonable conclusion? O 1. The stock offers a high dividend payout ratio. O 2. The market is overvaluing the stock. O 3. The stock has a low level of risk. O 4. The market is undervaluing the stock.A stock that does not pay a dividend must have a capital gains yield that is equal to the required return. Select one: True FalseFor whom are stocks riskier than bonds? For whom are bonds riskier than stocks? Company A sells heaters and Company B sells air conditioners. Which is the safer investment, Company A stock, Company B stock, or a portfolio containing half of each?