An investor is considering investing in one of the three stocks shown below: Stock Standard Deviation Beta A 20% 0.49 B 10% 0.61 C 7% 0.92 D 12% 1.29 If the stock is to be held in isolation and an investor is a strict risk minimizer, the investor would choose: Stock A if it is to be held in isolation. Stock B if it is to be held in isolation. Stock C if it is to be held in isolation. Stock D if it is to be held in isolation. Any of the Stocks would minimize risk if it is to be held in isolation. There is not enough information to make the decision. If the stock is to be held as part of a well-diversified portfolio and an investor is a strict risk minimizer, the investor would choose: Stock A if it is to be held in a well-diversified portfolio. Stock B if it is to be held in a well-diversified portfolio. Stock C if it is to be held in a well-diversified portfolio. Stock D if it is to be held in a well-diversified portfolio. Any of the Stocks would minimize risk if it is to be held in a well-diversified portfolio. There is not enough information to make the decision.
An investor is considering investing in one of the three stocks shown below: Stock Standard Deviation Beta A 20% 0.49 B 10% 0.61 C 7% 0.92 D 12% 1.29 If the stock is to be held in isolation and an investor is a strict risk minimizer, the investor would choose: Stock A if it is to be held in isolation. Stock B if it is to be held in isolation. Stock C if it is to be held in isolation. Stock D if it is to be held in isolation. Any of the Stocks would minimize risk if it is to be held in isolation. There is not enough information to make the decision. If the stock is to be held as part of a well-diversified portfolio and an investor is a strict risk minimizer, the investor would choose: Stock A if it is to be held in a well-diversified portfolio. Stock B if it is to be held in a well-diversified portfolio. Stock C if it is to be held in a well-diversified portfolio. Stock D if it is to be held in a well-diversified portfolio. Any of the Stocks would minimize risk if it is to be held in a well-diversified portfolio. There is not enough information to make the decision.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Questions 21 and 22 use the data in the table below.
- An investor is considering investing in one of the three stocks shown below:
|
Stock |
Standard Deviation |
Beta |
|
A |
20% |
0.49 |
|
B |
10% |
0.61 |
|
C |
7% |
0.92 |
|
D |
12% |
1.29 |
If the stock is to be held in isolation and an investor is a strict risk minimizer, the investor would choose:
- Stock A if it is to be held in isolation.
- Stock B if it is to be held in isolation.
- Stock C if it is to be held in isolation.
- Stock D if it is to be held in isolation.
- Any of the Stocks would minimize risk if it is to be held in isolation.
- There is not enough information to make the decision.
- If the stock is to be held as part of a well-diversified portfolio and an investor is a strict risk minimizer, the investor would choose:
- Stock A if it is to be held in a well-diversified portfolio.
- Stock B if it is to be held in a well-diversified portfolio.
- Stock C if it is to be held in a well-diversified portfolio.
- Stock D if it is to be held in a well-diversified portfolio.
- Any of the Stocks would minimize risk if it is to be held in a well-diversified portfolio.
- There is not enough information to make the decision.
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