Answered step by step
Verified Expert Solution
Question
1 Approved Answer
True or False: The best measure to use when comparing alternative investments is the amount of the dollar gain or loss. With holding periods of
|
True or False:
- The best measure to use when comparing alternative investments is the amount of the dollar gain or loss.
- With holding periods of more than a year, annualizing the HPR makes it smaller.
- The lower the correlation coefficient between two stocks, the greater will be the benefit from diversifying by combining the two stocks in a portfolio.
- Based on the period 1950 1999, you would have the less uncertainty about any expected return on small company stocks than you would about the expected return on large company stocks.
- Our author discusses the average return and standard deviation for 4 different assets for the period 1950 1999.
- "Diversifiable risk, Company-specific risk, Unsystematic risk and Market risk all refer to the same type of risk.
- By diversifying you can eliminate most or all of unsystematic risk.
- the standard deviation is the square root of the variance.
- A stock with one-half the average market risk would have a value for beta of 2.0.
- The only variable on the right-hand side of the CAPM formula that varies from one company to another is expected return on the market.
- In order to properly evaluate a stock, investors need only consider its risk.,
- Investors should always choose stocks with the highest reward-risk ratio.
- Ceteris paribus, ower standard deviations represent greater risk.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started