Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a well-diversified portfolio has eliminated most o

A well-diversified portfolio has eliminated most of the variance market risk expected return Firm -specific...

80.2K

Verified Solution

Question

Finance

image
image
image
image
image
A well-diversified portfolio has eliminated most of the variance market risk expected return Firm -specific (unsystematic) risk A portfolio is entirely invested into Buzz's Bauxite Boring equity, which is expected to return 16%, and Zum's Inc. bonds, which are expected to return 8% 60% of the funds are invested in Buzz's and the rest in Zum's. What is the expected return on the portfolio? 6.4% 9.6% 12.8% 24.2% The principle of diversification tells us that: concentrating an investment in two or three large stocks will eliminate all of your risk. spreading an investment across five diverse companies will not lower your overall risk at all. spreading an investment across many diverse assets will eliminate all of the risk spreading an investment across many diverse assets will eliminate some of the risk Standard deviation measures risk total nondiversifiable systematic unsystematic The diversification effect of a portfolio of two stocks increases as the correlation between the stocks rises. decreases as the correlation between the stocks rises. Both increases as the correlation between the stocks declines and decreases as the correlation between the stocks rises increases as the correlation between the stocks declines

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Susan is flying a kite which gets caught in the top of a tree Use...

Calculus
Q

Use the given conditions to write an equation for the line in? point-slope form and in?...

Basic Math
Q

1 point) A recent study in the Journal of the American Medical Association reported the results...

Statistics
Q

1. The coordination number of a metal atom in a close-packed structure is? 2. The coordination number...

Chemistry
Q

in setting the price for a new product or service, what factors would you take into...

General Management
Q

What is the purpose of having the three positive controls in the PCR experiment?In order...

Biology
Q

m or 10 HR ves A B 27 Planet X has a mass M radius...

Physics
Q

A balloon has a circumference of 11 cm. Use the circumference to approximate the surface...

Geometry
Q

Use the function equation to find the x-intercept of the linear function algebraically.G(x): =-220x +...

Basic Math
Q

Question 4 For each function below find f 1 x and give the domain and...

Algebra
Q

Vaby Spa purchased 1.00 in plumbing components from Tubman Co Voley 50 Studios signed a...

Accounting
Q

TRUE/FALSE 1) The accounts receivable method to estimate bad debts obtains the estimated balance in...

Accounting