Assume that you have a portfolio of two stocks, X and Y. If the risk of stock X is 1.2 and the risk of stock Y is 4, then the return on stock Y should be a) Greater than the return on Stock X b) We cannot tell c) Less than the return on stock X d) Equal to the return on stock S If the portfolio in the previous question is well diversified and stocks are strongly negatively related, then the risk for the portfolio will be a) Greater than the risk of stock X (i.e. greater than 1.2) but less than the risk on stock Y(i.e less than 4) b) We cannot tell c) Greater than the risk of stock Y (i.e. greater than 4) d) Less than the risk of stock X (i.e. less than 1.2)
Assume that you have a portfolio of two stocks, X and Y. If the risk of stock X is 1.2 and the risk of stock Y is 4, then the return on stock Y should be a) Greater than the return on Stock X b) We cannot tell c) Less than the return on stock X d) Equal to the return on stock S If the portfolio in the previous question is well diversified and stocks are strongly negatively related, then the risk for the portfolio will be a) Greater than the risk of stock X (i.e. greater than 1.2) but less than the risk on stock Y(i.e less than 4) b) We cannot tell c) Greater than the risk of stock Y (i.e. greater than 4) d) Less than the risk of stock X (i.e. less than 1.2)
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
Related questions
Question
this is one question with two parts, could you have it answered please
Transcribed Image Text:**Question 4:**
Assume that you have a portfolio of two stocks, X and Y. If the risk of stock X is 1.2 and the risk of stock Y is 4, then the return on stock Y should be:
a) Greater than the return on Stock X
b) We cannot tell
c) Less than the return on Stock X
d) Equal to the return on stock S
**Question 5:**
If the portfolio in the previous question is well diversified and stocks are strongly negatively related, then the risk for the portfolio will be:
a) Greater than the risk of stock X (i.e., greater than 1.2) but less than the risk on stock Y (i.e., less than 4)
b) We cannot tell
c) Greater than the risk of stock Y (i.e., greater than 4)
d) Less than the risk of stock X (i.e., less than 1.2)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education