To compute the riskiness of a stock we need to observe the returns of the individual stock versus market index returns across several data time points To observe this risk we use regression analysis The riskiness of a stock is the Beta ( ) coefficient Cathie Wood, a well known fund manager, wants to reduce the riskiness of her portfolio The is currently 1 6 Ignoring taxes, which option reduces Cathie's portfolio risk the most Multiple Choice Sell exactly half of each of her stock holdings, the proceeds of which should be held in cash Sell off the winner stocks and purchase more of the loser stocks in her portfolio The of each of the loser stocks are between 0 9 and 1 2 Sell all of her stocks and purchase shares of Microsoft The of Microsoft is currently 0 79 Decrease the number of holdings (individual companies) in her portfolio to only those stocks with a of 1 0 or higher Increase the number of holdings (individual companies) in her portfolio by purchasing additional companies stock whose is 1 6 or higher to increase diversification and reduce volatility

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Posted on Oct 02, 2024

To compute the riskiness of a stock we need to observe the returns of the individual stock versus market index returns across several data /

To compute the riskiness of a stock we need to observe the returns of the individual stock versus market index returns across several data / time points. To observe this risk we use regression analysis. The riskiness of a stock is the Beta ( ) coefficient. Cathie Wood, a well known fund manager, wants to reduce the riskiness of her portfolio. The is currently 1.6; Ignoring taxes, which option reduces Cathie's portfolio risk the most?

Multiple Choice

Sell exactly half of each of her stock holdings, the proceeds of which should be held in cash.
Sell off the "winner" stocks and purchase more of the "loser" stocks in her portfolio. The of each of the "loser" stocks are between 0.9 and 1.2
Sell all of her stocks and purchase shares of Microsoft. The of Microsoft is currently 0.79
Decrease the number of holdings (individual companies) in her portfolio to only those stocks with a of 1.0 or higher.
Increase the number of holdings (individual companies) in her portfolio by purchasing additional companies stock whose is 1.6 or higher to increase diversification and reduce volatility.