If an investor holds shares of about 20 different businesses all of the risk is eliminated...

If an investor holds shares of about 20 different businesses all of the risk is eliminated and the portfolio will give a return equal to the risk-free rate. Discuss the statement. (Write minimum 1,000 words)

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jeff jeffy answered 2 years ago

“If an investor holds shares of about 20 different businesses all of the risk is eliminated...

“If an investor holds shares of about 20 different businesses all of the risk is eliminated and the portfolio will give a return equal to the risk-free rate.” Discuss the statement. (Write minimum 1,000 words and prove proper referencing).

Unsystematic risk is risk which is common to all companies and can't be eliminated by diversification:...

Unsystematic risk is risk which is common to all companies and can't be eliminated by diversification: True False The minimum variance portfollio is defined as: a. The lowest risk portfollio obtainable in the universe of possible portfollios b. A portfollio comprised of a risky asset and a risk-free asset c. The portfollio in a set of available efficient portfollios that has the lowest risk d. The portfollio that has the lowest unsystematic risk An inefficient portfollio is one where another...

What is a risk? Provide an example of a risk. Must all risks be eliminated? Why...

What is a risk? Provide an example of a risk. Must all risks be eliminated? Why is it important for risks to be eliminated within an organization? Explain various ways risks can be eliminated. CMGT/442 Information Systems Risk Management

When an investor holds a stock that has lost nearly all of its value, the investor...

When an investor holds a stock that has lost nearly all of its value, the investor will often times sell the stock to her stock broker for the total sum of $1. Why do they do that? Legally, what happens if the company recovers and the stock becomes worth $1 million?

1. An investor purchases 400 shares at $21.40 a share, holds the stock for 30 weeks,...

1. An investor purchases 400 shares at $21.40 a share, holds the stock for 30 weeks, and then sells the stock for $24.60 a share. Use the commission schedule below from Company A to find the annual rate of interest earned by the investment. Company A Principal Under $3,000 $3,000-$10,000 Over $10,000 Commission $25 + 1.8% of principal $37 + 1.4% of principal $107 + 0.7% of principal 2. Find the annual percentage yield (APY) for money invested at an...

Suppose the CAPM holds. You know that the average investor has a degree of risk aversion...

Suppose the CAPM holds. You know that the average investor has a degree of risk aversion of 2.9. The current risk free rate is 0.017, the inflation is estimated at 0.027, and the volatility of the market is 0.162. What is the market risk premium?

An investor buys 185 amazon shares for $2400 each. she holds the investment for 2.5 years,...

An investor buys 185 amazon shares for $2400 each. she holds the investment for 2.5 years, collects $175 in dividends per share over this period, then sells the shares for a profit of $475 each. what is her total return?

An investor buys some shares of ABC for $20 at the beginning of the year. During...

An investor buys some shares of ABC for $20 at the beginning of the year. During the year he receives $0.50 in dividends, and then sells the shares for $21 at the end of the year. What is the total return on this investment?

There are different risk management models used by different businesses. One of these models contains seven...

There are different risk management models used by different businesses. One of these models contains seven key steps. Discuss the first THREE of these steps; providing an example of how each would work in practice.........

An investor is concerned about the expected return and the risk associated with the investments. The...

An investor is concerned about the expected return and the risk associated with the investments. The investor wants to find out the optimal allocation of money in these two stocks. The investor's objective is to minimize the portfolio's risk while the portfolios expected return is at least 5%. Let s1 and s2 be the fraction of investments in stock 1 and stock 2, The investor wants to invest s1= 40% and s2= 60%. What is the investor's risk for this...

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