Q1: Why do most investors prefer to hold a diversified portfolio of securities as opposed to placing all of their wealth in a single asset?

Q2: Given the following financial data, compute:

a. Return on equity.

b. Quick ratio.

c. Long-term debt to equity.

d. Fixed-charge coverage.

Assets:
Cash	$ 2,500
Accounts receivable	3,000
Inventory	6,500
Fixed assets	8,000
Total assets	$20,000
Liabilities and stockholders equity:
Short-term debt	$ 3,000
Long-term debt	2,000
Stockholders equity	15,000
Total liabilities and stockholders equity	$20,000
Income before fixed charges and taxes	$ 4,400
Interest payments	800
Lease payment	400
Taxes (35 percent tax rate)	1,120
Net income (after-taxes)	$ 2,080