Don't use chatgpt! What is the main purpose of diversification in an investment portfolio? A) To maximize returns B) To reduce risk C) To increase market share D) To monitor stock performance
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Don't use chatgpt!
What is the main purpose of diversification in an investment portfolio?
A) To maximize returns
B) To reduce risk
C) To increase market share
D) To monitor stock performance
Step by step
Solved in 2 steps
- This question relates to the two types of risk and to diversification. a)What is specific risk? b)What is market risk? c)What is meant by diversification? d)Explain why diversification is a useful tool to manage specific risk but not market risk. Be sure you answer clearly both why diversification can help manages specific risk as well as why it is not useful in managing market risk. e)Approximately how many stocks in a portfolio do you need to be fully diversified?Explain how the portfolio approach to investment allows the reduction of risk and why Beta therefore is the most appropriate measure of stock risk?Explain Systematic (market risk) and Business-specific risk. Can diversification of the portfolio reduce each? please explain to me as simply as possible.
- Answer quickly After making an investment, an investor learns that Intel stock is now undervalued. This is an illustration of a. Market Interruption b. Portfolio Management c. Security Analysis d. Asset AllocationDiscuss the importance of market efficiency and explain why some markets are more efficient than others. •Explain the distinction between a stock's price and its intrinsic value, then discuss the two models that can be used to estimate a stock's intrinsic value.Which of the following statements concerning the Efficient Market Hypothesis is correct? Select one: a. Stock market prices are based on speculation not on underlying information b. New information that confirms investor expectations should change stock prices c. Stock prices should slowly respond when unexpected information becomes available d. Careful research can help investors earn abnormal profits e. Your return on investment should reflect the riskiness of your portfolio
- Portfolio management requires the knowledge of knowing the correct combination of stocks, bonds, cash, or alternative investments. With this is mind, how does ‘diversification reduce risk’. Make sure you include details on what portfolio management is.(a) What is the CML? Include a graph in your answer. (b) Do all individual assets plot below the CML? Why or why not? Explain. c) "As we have the CAPM, we do not need portfolio theory." True or False. ExplainWith the aid of relevant examples, contrast value investing with growth investing and show how these are applicable to the portfolio management process. Discuss which type of shares are most suitable to be assessed with the Piotrowski framework? 3. Critically discuss any recent news article of your choice within the context of the Efficient Market Hypothesis. 4. What are the key differences between the Arbitrage Pricing Theory (APT) and the Capital Asset Pricing Model (CAPM) as they relate to portfolio management?
- H2. What are the different types of expected return and related risk, for individual assets and for portfolios as a whole. Explain carefully what each type represents and give examples in each case. What type of expected returns does the CAPM model capture? What type of expected return and risk you are exposed to if you have the FTSE 100 INDEX only in the portfolio?Which of the following are the MAIN REASONS for an investor to invest in managed funds? I - To obtain a better return. II - To diversify risks. III - Lack of time to look after their own investments. IV - More freedom on stock selection. A) I, II and III only B) I, II and IV only C) I, III and IV only D) II, III and IV onlyThe objective function of an investor in a CAPM world is to what (mathematically) [what are your trying to maximize]? What is the major assumption about the distribution of returns that we have to make to get to this objective function?