Question
You are the wealth manager for a family estate, and you manage an all-equity portfolio that currently includes 54 stocks representing many different sectors of
You are the wealth manager for a family estate, and you manage an all-equity portfolio that currently includes 54 stocks representing many different sectors of the economy. The investment objective of your portfolio is to provide capital gains over the long run while maintaining the portfolios current risk level. Using your knowledge of investment selection gained in our class, select the ONE stock from the chart below that would provide the best opportunity to maintain the objective. State why (in 2 sentences or less) you made your selection.
Stock | Historical return (previous year) | Expected return (upcoming year) | Required rate of return | Std dev of returns (annual) | Industry | Beta |
A | 5.6% | 8.1% | 9.6% | 15.9% | Retail | 0.93 |
B | 11.8% | 6.2% | 6.0% | 24.4% | Mining | 1.33 |
C | -2.8% | 8.9% | 7.8% | 31.2% | Financial services | 1.17 |
D | 4.6% | 4.5% | 6.1% | 67.9% | Healthcare | 1.04 |
E | 15.0% | 10.3% | 10.1% | 49.7% | Biotech | 1.56 |
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