76 309
Assignments Done
Successfully Done
In May 2019

Answer to Question #33613 in Economics of Enterprise for hiral

Question #33613
Your question (max 1024 symbols)Which of the following statements is CORRECT?
a. If Mutual Fund A held equal amounts of 100 stocks, each of which had a beta of 1.0, and
Mutual Fund B held equal amounts of 10 stocks with betas of 1.0, then the two mutual funds
would both have betas of 1.0. Thus, they would be equally risky from an investor's
standpoint, assuming the investor's only asset is one or the other of the mutual funds.
b. If investors become more risk averse but rRF does not change, then the required rate of return
on high-beta stocks will rise and the required return on low-beta stocks will decline, but the
required return on an average-risk stock will not change.
c. An investor who holds just one stock will generally be exposed to more risk than an investor
who holds a portfolio of stocks, assuming the stocks are all equally risky. Since the holder of
the 1-stock portfolio is exposed to more risk, he or she can expect to earn a higher rate of
return to compensate for the greater risk.
d. There is no
Expert's answer
Unfortunately, your question requires a lot of work and cannot be done for free.
Submit it with all requirements as an assignment to our control panel and we'll assist you.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!


No comments. Be first!

Leave a comment

Ask Your question

Privacy policy Terms and Conditions