Questions from General Investment

Q: Which of the following factors reflect pure market risk for a given

Which of the following factors reflect pure market risk for a given corporation? a. Increased short-term interest rates. b. Fire in the corporate warehouse. c. Increased insurance costs. d. Death of t...

Q: What are the key differences between common stock, preferred stock,

What are the key differences between common stock, preferred stock, and corporate bonds?

Q: True or false: Assume that expected returns and standard deviations for

True or false: Assume that expected returns and standard deviations for all securities (including the risk-free rate for borrowing and lending) are known. In this case, all investors will have the sam...

Q: Suppose you have a project that has a .7 chance of

Suppose you have a project that has a .7 chance of doubling your investment in a year and a .3 chance of halving your investment in a year. What is the standard deviation of the rate of return on this...

Q: Suppose that you have $1 million and the following two opportunities

Suppose that you have $1 million and the following two opportunities from which to construct a portfolio: a. Risk-free asset earning 12% per year. b. Risky asset with expected return of 30% per year a...

Q: FBN Inc. has just sold 100,000 shares in an

FBN Inc. has just sold 100,000 shares in an initial public offering. The underwriter’s explicit fees were $70,000. The offering price for the shares was $50, but immediately upon issue, the share pric...

Q: The correlation coefficients between several pairs of stocks are as follows:

The correlation coefficients between several pairs of stocks are as follows: Corr(A, B) = .85; Corr(A, C) = .60; Corr(A, D) = .45. Each stock has an expected return of 8% and a standard deviation of 2...

Q: The correlation coefficients between several pairs of stocks are as follows:

The correlation coefficients between several pairs of stocks are as follows: Corr(A, B) = .85; Corr(A, C) = .60; Corr(A, D) = .45. Each stock has an expected return of 8% and a standard deviation of 2...

Q: Greta has risk aversion of A = 3 when applied to return

Greta has risk aversion of A = 3 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of one-year strategies. (A...

Q: Greta has risk aversion of A = 3 when applied to return

Greta has risk aversion of A = 3 when applied to return on wealth over a one-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of one-year strategies. (A...