Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Total, nondiversifiable, and diversifiable risk David Talbot randomly selected securities from all those listed on the New York Stock Exchange for his portfolio. He began

image text in transcribed

Total, nondiversifiable, and diversifiable risk David Talbot randomly selected securities from all those listed on the New York Stock Exchange for his portfolio. He began with a single security and added securities one by one until a total o 20 securities were held in the portfolio. After each security was added David calculated the portfolio standard deviation, ? The calculated values are shown in the following table: a. Plot the date from the table on a graph that has the number of securities on the x-axis and the portfolio standard deviation on the y-axis b. Divide the total portfolio risk in the graph intoits nondiversifiable and diversifiable risk components, and label each of these on the graph. c. Describe which of the two risk components is the relevant risk, and explain why it is relevant. How much of this risk exists in David Talbof's portfolio? t the best answer below.) iData Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) 12 Number of Portfolio ? securities Portfolio risk, , 18.20% 16.50% 14.90% 13.30% 12.30% 11 .50% 10.70% 10.10% 9.30% 8.60% Number of securities risk, ?r 7 10% 7.10% 6.50% 6.00% 5 .70% 5.50% 5 .30% 5.25% 5.20% 5.15% Nondiversifiable Risk 12 13 14 15 16 Diversifiable Risk 15 20 10 Number of Securities in Portfolio O D 18 19 20

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Rental Application Form Book

Authors: Little Deer Press

1st Edition

979-8420403747

More Books

Students also viewed these Finance questions