Question

In: Finance

You may have heard the statement that you should not include your home as an asset...

You may have heard the statement that you should not include your home as an asset in your investment portfolio. Assume that your house will compromise up to 75% of your assets in the early part of your investment life. Evaluate the implications of omitting it when calculating the risk of your overall investment portfolio:

Solutions

Expert Solution

Implications of omitting home when calcualting the risk of your overall investment portfolio.

1) Standard deviation of new portfolio will be high as compared to previous one.

2) Diversification benefit will no longer be seen in new portfolio as residential property is not correlated to stocks, etc.

3)Risk adjusted return will seen as reduced as compared to previous one.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You may have heard that Social Security is in danger of failing. Why? Is the sky...
You may have heard that Social Security is in danger of failing. Why? Is the sky falling? What might be done to correct the situation? Use some of the things that you have learned to come up with some ideas to fix Social Security.
You have to include the appropriate output in your report. Your analysis output should be properly...
You have to include the appropriate output in your report. Your analysis output should be properly shaped such as changing the decimal points, copy, and pasted on to your report paper. when you label your output, specify what program did you use to bring the regression output. Ex: Excel Regression Analysis. Submit in one file using docs or PDF format. (1-2 page including regression output) Recognizing appropriate tools & performing all analysis that needs to be done Able to organize...
Why is a home a good inflation hedge? Should a home be included as an asset...
Why is a home a good inflation hedge? Should a home be included as an asset if its occupants aren’t sure they could sell it?
You may have heard of the recent implementation of increase in minimum wage law in New...
You may have heard of the recent implementation of increase in minimum wage law in New York State. Explain the meaning of “minimum wage” law. Who is affected by this law? List all affected groups. What would impact of rise in minimum wage on businesses? Should there be a law regarding minimum wage or should wage decisions be left to market forces? Discuss the degree to which wages should be determined by the government.
Think of a situation that you may have experienced, witnessed, or heard about where the unethical...
Think of a situation that you may have experienced, witnessed, or heard about where the unethical side of Marketing was displayed. In a 2-3 paragraph response tell about it and tell us why it was unethical.
You may have heard that ice skaters actually skate on a thin layer of water rather...
You may have heard that ice skaters actually skate on a thin layer of water rather than solid ice (which reduces friction on the blade and allows them to skate faster). Let’s work through a calculation to determine if this statement is reasonable. Estimate the pressure exerted by a 200-lb hockey player, standing on two blades that are 0.1 mm x 20 cm. Calculate the melting point of ice below the player, assuming that the density of ice under these...
You may have heard that ice skaters actually skate on a thin layer of water rather...
You may have heard that ice skaters actually skate on a thin layer of water rather than solid ice (which reduces friction on the blade and allows them to skate faster). Let’s work through a calculation to determine if this statement is reasonable. Estimate the pressure exerted by a 200-lb hockey player, standing on two blades that are 0.1 mm  20 cm. Calculate the melting point of ice below the player, assuming that the density of ice under these...
You have heard that if you leave your money in mutual funds for a longer period...
You have heard that if you leave your money in mutual funds for a longer period of​ time, you will see a greater return. So you would like to compare the​ 3-year and​ 5-year returns of a random sample of mutual funds to see if​ indeed, your return is expected to be greater if you leave your money in the fund for 5 years. Complete parts a through d. Assume a significance level of alpha equals0.05. 3-Year_Returns 0.56 6.79 7.07...
I have heard the statement that "...the sole purpose of a business is to make a...
I have heard the statement that "...the sole purpose of a business is to make a profit" - do you believe that should be the goal of every company? I am not saying it is right or that it is wrong, I want to see what you can do with this assertion. As an investor, I may agree with this statement ... as a member of society I may not agree with this statement. What are your thoughts on this...
Select a discussion about a difficult topic you have heard about. Begin with a statement. Write...
Select a discussion about a difficult topic you have heard about. Begin with a statement. Write out a comment for each of the 8 elements from the circle of elements: Purpose, Question, assumptions, Implications, information, concepts, conclusions and point of view.Select a discussion about a difficult topic you have heard about. Begin with a statement. Write out a comment for each of the 8 elements from the circle of elements: Purpose, Question, assumptions, Implications, information, concepts, conclusions and point of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT