Betas and risk rankings Personal Finance Problem You are considering three stocks -A, B, and C-for possible inclusion in your investment portfolio. Stock A has a beta of 1.2, stock B has a beta of 1.5, and stock C has a beta of -0.2. a. Rank these stocks from the most risky to the least risky. b. If you believed that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? c. If you anticipated a major stock market rally, which stock would you add to your portfolio? a. Which stock is the most risky one? (Select the best answer below.) O A. Stock A O B. Stock B O C. Stock C Which stock is the least risky one? (Select the best answer below.) O A. Stock B O B. Stock A O C. Stock C b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.) b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.) O A. Stock C O B. Stock B OC. Stock A c. If you anticipated a major stock market rally, which stock would you add to your portfolio? (Select the best answer below.) O A. Stock C O B. Stock A O c. Stock B
Betas and risk rankings Personal Finance Problem You are considering three stocks -A, B, and C-for possible inclusion in your investment portfolio. Stock A has a beta of 1.2, stock B has a beta of 1.5, and stock C has a beta of -0.2. a. Rank these stocks from the most risky to the least risky. b. If you believed that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? c. If you anticipated a major stock market rally, which stock would you add to your portfolio? a. Which stock is the most risky one? (Select the best answer below.) O A. Stock A O B. Stock B O C. Stock C Which stock is the least risky one? (Select the best answer below.) O A. Stock B O B. Stock A O C. Stock C b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.) b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.) O A. Stock C O B. Stock B OC. Stock A c. If you anticipated a major stock market rally, which stock would you add to your portfolio? (Select the best answer below.) O A. Stock C O B. Stock A O c. Stock B
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter5: Risk Analysis
Section: Chapter Questions
Problem 11QE: Market equity beta measures the covariability of a firms returns with all shares traded on the...
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![Betas and risk rankings Personal Finance Problem You are considering three stocks -A, B, and C- for possible inclusion in your investment portfolio. Stock A has a beta of 1.2,
stock B has a beta of 1.5, and stock C has a beta of - 0.2.
a. Rank these stocks from the most risky to the least risky.
b. If you believed that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio?
c. If you anticipated a major stock market rally, which stock would you add to your portfolio?
a. Which stock is the most risky one? (Select the best answer below.)
O A. Stock A
O B. Stock B
O C. Stock C
Which stock is the least risky one? (Select the best answer below.)
O A. Stock B
O B. Stock A
O C. Stock C
b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.)
b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.)
O A. Stock C
O B. Stock B
O C. Stock A
c. If you anticipated a major stock market rally, which stock would you add to your portfolio? (Select the best answer below.)
O A. Stock C
O B. Stock A
OC. Stock B](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc4d623f-c711-4b60-bab4-ca95e65a373c%2Faaf52ae4-a4aa-4136-908e-700728e4106b%2Feh6sni_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Betas and risk rankings Personal Finance Problem You are considering three stocks -A, B, and C- for possible inclusion in your investment portfolio. Stock A has a beta of 1.2,
stock B has a beta of 1.5, and stock C has a beta of - 0.2.
a. Rank these stocks from the most risky to the least risky.
b. If you believed that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio?
c. If you anticipated a major stock market rally, which stock would you add to your portfolio?
a. Which stock is the most risky one? (Select the best answer below.)
O A. Stock A
O B. Stock B
O C. Stock C
Which stock is the least risky one? (Select the best answer below.)
O A. Stock B
O B. Stock A
O C. Stock C
b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.)
b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.)
O A. Stock C
O B. Stock B
O C. Stock A
c. If you anticipated a major stock market rally, which stock would you add to your portfolio? (Select the best answer below.)
O A. Stock C
O B. Stock A
OC. Stock B
![Assessing return and risk Swift Manufacturing must choose between two asset purchases. The annual rate of return and the related probabilities given in the
following table summarize the firm's analysis to this point: E
a. Compute the range of possible rates of return.
b. Compute the expected return.
c. Compute the standard deviation of the returns.
d. Compute the coefficient of variation of the returns.
a. The range of possible rates of return is %. (Round to the nearest whole number.)
b. The expected value of return is %. (Round to two decimal places.)
c. The standard deviation of the returns is %. (Round to two decimal places.)
d. The coefficient of variation of the returns is
(Round to two decimal places.)
(Click on the icon here in order to copy the contents of the data table below
into a spreadsheet.)
Rate of return
Probability
5%
0.10
15%
0.05
25%
0.10
35%
0.10
45%
0.35
55%
0.05
65%
0.05
75%
0.10
85%
0.10](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc4d623f-c711-4b60-bab4-ca95e65a373c%2Faaf52ae4-a4aa-4136-908e-700728e4106b%2Fhuh0cs6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assessing return and risk Swift Manufacturing must choose between two asset purchases. The annual rate of return and the related probabilities given in the
following table summarize the firm's analysis to this point: E
a. Compute the range of possible rates of return.
b. Compute the expected return.
c. Compute the standard deviation of the returns.
d. Compute the coefficient of variation of the returns.
a. The range of possible rates of return is %. (Round to the nearest whole number.)
b. The expected value of return is %. (Round to two decimal places.)
c. The standard deviation of the returns is %. (Round to two decimal places.)
d. The coefficient of variation of the returns is
(Round to two decimal places.)
(Click on the icon here in order to copy the contents of the data table below
into a spreadsheet.)
Rate of return
Probability
5%
0.10
15%
0.05
25%
0.10
35%
0.10
45%
0.35
55%
0.05
65%
0.05
75%
0.10
85%
0.10
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