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
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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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
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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