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Please answer with true or false
1. Common stocks and preferred stocks come with the same voting right
2. The shorter your time horizon , the less conservative you should be in investing your money.
3.If there is a little amount of risk in your investment, there will also a relatively little potential amount of return.
4.Your personality should be considered in making an investment
5. An investors financial position will also affect his or her objectives .
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Solved in 2 steps
- You were offered 2 investment opportunities, Stock M and Stock D. Your decision as to which investment to take will be based on the results of the comparative Expected Rate of Return using the following data: Stock M Return is 9.6% and Beta is 0.95 while Stock D Return is 8.7% and Beta is 1.2. A risk free return in the market, as measured by the return on government stock is 5.6%. *Which of the following is true regarding the smart investor? Multiple Choice A. They require a risk premium for the risk taken B. They trade in the mornings when the market is least volatile C. They avoid risky investments D. They like investments with betas < 1(a)Jack is considering investing in the stocks. The two stocks are available with the following particulars: Stock Return %Beta Marvel 9.60.75DC8.71.3 As measured by the return on government stock, a risk-free return in the market is 3.6%.Using capital asset pricing model, Calculate: (i) The rate of return of stock Marvel (Ii) The rate of return of stock DC (iii) Which stock should Jack invest in and why? (b) Explain the advantages and limitations of capital asset pricing model (This is subpart question nor multiple questions) so I humble request please answer I give up thumb
- Clay Jensen is evaluating whether to purchase one of 2 different stocks and is considering the investment in isolation (he has no other investments). Clay believes stock A has equal probabilities of returning 6%, -10%, or 22%. He believes stock B has equal probabilities of returning 9%, -20%, or 35%. The risk-free rate is 4%. What is the appropriate measure to compare these two stocks and which investment should he choose?Consider yourself a rational investor and you are evaluating what to include in your 2-stock portfolio. What will you most likely do? Invest in Meralco and SMC Power stocks because they are in the same industry and have shown a higher positive correlation of 0.80 which is good for diversification. Invest in SMC Power and Robinsons because they are negatively correlated. Invest in Robinsons Retail and BDO Unibank because regardless of the correlation coefficient, they both are, or are affiliated with companies in the same retail market. BDO is affiliated with SM Malls and Supermarket. Invest in BDO Unibank and Meralco because the BDO Unibank is a supporting industry to Meralco by providing loans. This is evidenced by a high positive correlation of 0.60. None of the above.assuming that the stock market is efficient which of the following statements is correct? A. investors can make money through investing in hot IPO‘s. B. skilled mutual fund managers can outperform the market by selecting undervalued stocks. C. investing in individual stocks is always more rewarding than in diversified portfolios. D. The best investment vehicle is market index funds.
- CAN I GET HELP as soon as possible please Explain your answer for each of them. Show all your work. The required return on ABC stock is 14%. The risk-free rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk? A) 8% B) 10% C) 12% D) 14% The efficient market hypothesis suggests thatA) investors should not try to outguess the market by constantly buying and selling securities. B) investors do better on average if they adopt a "buy and hold" strategy.C) buying into a mutual fund is a sensible strategy for a small investor.D) all of the above are sensible strategies.E) only A and B of the above are sensible strategies.You must choose between investing in Stock A or Stock B. You have already used CAPM to calculate the rate of return you should expect to receive for each stock given each one’s systematic risk and decided that the expected return for both exceeds that predicted by CAPM by the same amount. In other words, both are equally attractive investments for a diversified investor. However, since you are still in school and do not have a lot of money, your investment portfolio is not diversified. You have decided to invest in the stock that has the highest expected return per unit of total risk.If the expected return and standard deviation of returns for Stock A are 10 percent and 25 percent, respectively, and the expected return and standard deviation of returns for Stock B are 16 percent and 36 percent, respectively, which should you choose? Assume that the risk-free rate is 7 percent.You meet with two investors who have different expectations for stock CBD that can be addressed with various positions in puts, calls, and the underlying stock (or combination). For each investor, document the (1) name of the recommended strategy, (2) the components of the suggested trade, and (3) draw the payoff as a function of the stock price. a. Investor A already holds CBD stock and wants to lock in gains if the stock drops below its current levels, while maintaining upside exposure. b. Investor B wants to profit if CBD’s upcoming earnings announcement is either unexpectedly good or disappointingly bad. c. Investor C already holds CBD stock and believes the stock will not increase much in the near term. As such, she wants to earn some extra income using options.
- q2- Which of the following statements is correct? Select one: a. Only risk averse investors would prefer the maximum return for a given level of risk. b. All investors would prefer the minimum risk for a given level of return. c. All investors would refer the maximum level of return for a given level of risk. d. None of the above. Clear my choiceYou are a risk-averse investor who is considering investing in one of two economies. The expectedreturn and volatility of all stocks in both economies is the same. In the first economy, all stocks movetogether in good times all prices rise together, and in bad times they all fall together. In the secondeconomy, stock returns are independent one stock increasing in price has no effect on the prices ofother stocks. Which economy would you choose to invest in? Explain. a. A risk averse investor would prefer the economy in which stock returns are independent becauseby combining the stocks into a portfolio he or she can get a higher expected return than in theeconomy in which all stocks move together.b. A risk averse investor would choose the economy in which stock returns are independent becauserisk can be diversified away in a large portfolio.c. A risk averse investor is indifferent in both cases because he or she faces unpredictable risk.d. A risk averse investor would choose the economy…1. Assuming that all expectations hold up and that Christine buys the stock at $70, determine her expected return on his investment. 2. What risks is she facing by buying this stock? Be specific 3. Should she consider the stock a worthwhile investment candidate? Explain 4. What do you think of her investment program? What do you see as its strengths and weaknesses? 5. Are they any suggestions you would make? 6. Do you think Christine should consider adding foreign stocks to her portfolio? Explain