Yessy Enterprise Ltd has prepared the following information regarding two investments under consideration. Based on the risk/return profile, which investment should be accepted? Investment A Investment B Probability Return Probability Return 0.15 8% 0.20 1% 0.35 11% 0.30 8% 0.35 19% 0.30 15% 0.15 -2% 0.20 9% Will you change your recommendation (above) if Yessy Enterprise currently holds a portfolio with only five stocks? Why?
Yessy Enterprise Ltd has prepared the following information regarding two investments under consideration. Based on the risk/return profile, which investment should be accepted? Investment A Investment B Probability Return Probability Return 0.15 8% 0.20 1% 0.35 11% 0.30 8% 0.35 19% 0.30 15% 0.15 -2% 0.20 9% Will you change your recommendation (above) if Yessy Enterprise currently holds a portfolio with only five stocks? Why?
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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Question
Yessy Enterprise Ltd has prepared the following information regarding two investments under consideration. Based on the risk/return profile, which investment should be accepted?
|
Investment A |
Investment B |
||
|
Probability |
Return |
Probability |
Return |
|
0.15 |
8% |
0.20 |
1% |
|
0.35 |
11% |
0.30 |
8% |
|
0.35 |
19% |
0.30 |
15% |
|
0.15 |
-2% |
0.20 |
9% |
Will you change your recommendation (above) if Yessy Enterprise currently holds a portfolio with only five stocks? Why?
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