Question
Suppose there are two options to invest in stocks: Option 1: Invest in one single stock Option 2: Invest in a portfolio consisting of different
- Suppose there are two options to invest in stocks:Option 1: Invest in one single stockOption 2: Invest in a portfolio consisting of different stocksWhat kinds of risk you face for option 1 and options 2? Compare the risks of the two options.
2. You are interested in investing in a portfolio including stocks A, B, C and D. You have talked to three different financial strategists: Dan, Paul and Mary. Assuming that the risk-free rate is 4% and the expected return on the market is 12%. Who should you take their advice? (choose one person).
| Stock | Beta | Dans Investment | Paul's Investment | Mary's Investment |
| A | 1.3 | 2500 | 5000 | 10,000 |
| B | 1.0 | 2500 | 5000 | 10,000 |
| C | 0.8 | 2500 | 5000 | -5000 |
| D | -0.5 | 2500 | -5000 | -5000 |
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Entrepreneurship
Authors: Andrew Zacharakis, William D Bygrave
5th Edition
1119563097, 9781119563099
