Question
In: Finance
Your spouse/significant other asks you about the concept of risk and return (oh? Please - this...
Your spouse/significant other asks you about the concept of risk and return (oh? Please - this is a quiz, so bear with me). Which of the following statements would you not want to tell them?
| a. |
Modern portfolio theory suggests that investors are rewarded in terms of the risk-return trade-off for holding a diversified portfolio of securities across a variety of asset classes. |
|
| b. |
In efficient markets you need to be willing to take higher potential risk for higher potential return. |
|
| c. |
Investors that are willing to hold an asset riskier than the risk-free security should be entitled to a market premium. |
|
| d. |
There is no risk in investing all your assets into the risk-free Treasury bill. |
Solutions
Expert Solution
a) This statement is correct, so I would tell that.
b) This statement is correct, so I would tell that.
c) This statement is not true.
d) This statement is correct, so I would tell that.
jeff jeffy answered 2 years agoRelated Solutions
Risk and Return Use the following data to explore the risk-return relation and the concept of...
Risk and Return
Use the following data to explore the risk-return relation and
the concept of beta for Apple stock, Kroger stock, and the S&P
500 market index:
Year
Apple Stock Price
Kroger Stock Price
S&P 500 Market Index
2020
$252.92
$30.71
3,234.85
2019
$156.23
$27.66
2,531.94
2018
$169.23
$27.32
2,753.15
2017
$125.17
$29.52
2,276.98
2016
$108.41
$31.80
2,043.94
2015
$112.98
$33.37
2,058.20
Part 1: Risk and Beta
Calculate the return each year for Apple, Kroger, and the
Market using...
Risk and Return Use the following data to explore the risk-return relation and the concept of...
Risk and Return
Use the following data to explore the risk-return relation and
the concept of beta for Apple stock, Kroger stock, and the S&P
500 market index:
Year
Apple Stock Price
Kroger Stock Price
S&P 500 Market Index
2020
$252.92
$30.71
3,234.85
2019
$156.23
$27.66
2,531.94
2018
$169.23
$27.32
2,753.15
2017
$125.17
$29.52
2,276.98
2016
$108.41
$31.80
2,043.94
2015
$112.98
$33.37
2,058.20
Part 2: Required Return
Market risk premium: RPM =
5.60%
Risk-free rate: rRF =
0.70%
Calculate the...
Diversification in an investment portfolio is a significant concept for creating the highest return for the...
Diversification in an investment portfolio is a significant
concept for creating the highest return for the least amount of
risk. To create this diversification portfolio managers consider
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explain how correlation is interpreted and how it can help with the
creation of a diversified portfolio.
Discuss the concept of risk and return. As a potential investor, where do you think you...
Discuss the concept of risk and return. As a
potential investor, where do you think you fall on the conservative
to aggressive spectrum, and how does that tie into risk and
return?
How do you measure the expected return & risk of a portfolio? How the concept of...
How do you measure the expected return & risk of a
portfolio? How the concept of correlation between asset returns is
used in portfolio diversification? Explain.
IN DEPTH ANSWER PLEASE 1. Discuss the concept of the risk-return trade-off and how it may...
IN DEPTH ANSWER PLEASE
1. Discuss the concept of the risk-return trade-off and how it
may apply in different circumstances.
2. Outline the risk-reduction benefits of diversification of an
investment portfolio. In your answer, briefly discuss how portfolio
diversification works in principle to minimise overall investment
risk.
Perhaps you and/or your significant other is a carrier of a harmful recessive trait, such as...
Perhaps you and/or your significant other is a carrier of a
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Please do in excell 1. Your family (you, your spouse, and five-year-old child) are planning a...
Please do in excell
1. Your family (you, your spouse, and five-year-old child) are
planning a trip to Walt Disney World in Orlando, Florida.
Representatives from upper management (your spouse and child) have
specified that the trip will entail travel to Orlando, a four-night
stay, and three days spent in Disney World itself. You and your
spouse have allocated about $5,000 from your annual budget for this
project.
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If you were going to purchase a house with your significant other but you do have...
If you were going to purchase a house with your significant
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ownership? Would your answer change if your significant other was
not the father of your children? Explain.
explain the concept of risk and return using the friedman savage hypothesis
explain the concept of risk and return using the friedman savage
hypothesis
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