Question
I dont understand 1-What effect will diversifying your portfolio have on your returns and your level of risk? 2-What are differences between Systematic and Unsystematic
I dont understand
1-What effect will diversifying your portfolio have on your returns and your level of risk?
2-What are differences between Systematic and Unsystematic Risk?
3-Use the CAPM to compute the reasonable return for each of these fashion related stocks.Use 0.5% as the risk free rate of return use 5.5% as the market rate of return.Retrieve beta from Yahoo Finance athttp://finance.yahoo.com/or useGoogle. (please indicate which website you retrieved Beta from).
- PVH Corp (PVH)
- Tiffany (TIF)
- Guess? (GES)
4-Use the CAPM to compute the reasonable return for each of these stocks.Use risk free rate of return and the market rate of returngivenin#1, above.
a.Pepsi (PEP)
b..Johnson & Johnson (JNJ)
c.Procter & Gamble (PG)
5-Why do the returns you computed above represent
a.a reasonable (or fair) return for each stock?
b.The required return for each stock?
6-What do you notice about the pattern or trend of returns for the fashion companies (in #1) as compare to those of the non-fashion companies (in #2)?Why does that occur?Does that make sense in terms of the line of business of the companies in the respective groups?
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