In: Accounting
You have reviewed the characteristics and historical prices of two companies (A and B), and have estimated their relations to the wider market, detailed below:
Company A |
Company B |
|
Current dividends per share (just paid) |
$0.06 |
$0.40 |
Current Beta |
1.3 |
1.5 |
Growth in dividends |
4% |
5% |
Date |
Share Price A |
Share Price B |
2016 |
$0.35 |
$4.13 |
2017 |
$0.42 |
$6.76 |
2018 |
$0.40 |
$5.23 |
2019 |
$0.52 |
$4.88 |
Other information:
d. Briefly explain, in your own words, what is likely to occur, in relation to the risk exposure of an investment portfolio, as an investor increases the number of investments in the investment portfolio