Eliminate risk by combining these two stocks in portfolio

Assignment Help Financial Management
Reference no: EM131358167

A. If you were too choose only one of the stocks, either PFE or AAPL, which stock would you select? Explain your choice.

B. Which combination of PFE and AAPL (approximately) represents the “minimum variance portfolio”?

C. Explain why we can eliminate risk by combining these two stocks in a portfolio.

Reference no: EM131358167

Questions Cloud

What is the market price of this bond if the face value : Great owl corp. offers a 7.5 percent coupon bond with annual payments. the yield to maturity is 5 percent and the bond matures 20 years from today. what is the market price of this bond if the face value is $1,000?
What is the company total book and market value of debt : Jiminy's Cricket Farm issued a 30-year, 7 percent semi-annual bond 9 years ago. The bond currently sells for 88 percent of its face value. The book value of the debt issue is $17 million. The company's tax rate is 34 percent. What is the company's to..
Outstanding bonds-what is this firm wacc : A company has $109 million in outstanding bonds, and 10 million shares of stock currently trading at $31 per share.The bonds pay a coupon rate of 8%. The company's beta is 0.9, its tax rate is 40%, the risk-free rate is 4%, and the market risk premiu..
Eliminate risk by combining these two stocks in portfolio : If you were too choose only one of the stocks, either PFE or AAPL, which stock would you select? Explain your choice. Which combination of PFE and AAPL (approximately) represents the “minimum variance portfolio”? Explain why we can eliminate risk by ..
Eliminate risk by combining these two stocks in portfolio : If you were too choose only one of the stocks, either PFE or AAPL, which stock would you select? Explain your choice. Which combination of PFE and AAPL (approximately) represents the “minimum variance portfolio”? Explain why we can eliminate risk by ..
A tax-paying corporation interested in liquidity : A tax-paying corporation interested in liquidity would prefer to invest short-term money in: When a merger of two firms is achieved by one firm automatically assuming all the assets and all the liabilities of the other firm; such a merger requires:
What is the standard deviation of returns : The common stock of Air United had annual returns of 13.7 percent, 4.8 percent, -6.7 percent, and 27.9 percent over the last four years, respectively. What is the standard deviation of these returns?
What is a peso worth in terms of us dollars : Assume the US dollar exchanges for the Mexican peso at the rate of $1 US = 25 Pesos. What is a peso worth in terms of US dollars? Assume the exchange rate is now $1 US = 100 Pesos. which currency as appreciated an why?
Prevent extreme damage resulting from bank run : What is a bank run? Why are banks vulnerable to them? What are the tools available to banks to prevent extreme damage resulting from a bank run? Bank runs illustrate which type of financial risk most strongly (interest rate, credit, sovereign, market..

Reviews

Write a Review

Financial Management Questions & Answers

  Before taxes per year in order processing costs

Your firm is contemplating the purchase of a new $560,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $56,000 at the end of that time. You will save $280,000 before..

  Literature review on optimal capital structure does it exist

SBM2103 Financial Management Assignment. This assignment requires you (in a group of 2-3 students) to provide a literature review on one of the following topics: Optimal capital structure: does it exist? Islamic financing: can it work in Western syst..

  What is the beta of dells underlying business enterprise

In mid-2012, Dell Inc. had a market capitalization of $21 billion, $8 billion in debt, and $13 billion in cash. The estimated equity beta was 1.41. What is the beta of Dells underlying business enterprise?

  The rate of return of the british stock market

If a U.S. investor in the U.S. stock market experiences a negative rate of return, is it possible for a French investor with the same investment to experience a positive rate of return?

  What is the yield

Assume an investor purchased a sixmonth T-bill with a $10,000 par value for $9,000 and sold it 90 days later for $9,100. What is the yield?

  What is the market rate of return on this stock

The common stock of Eddie's Engines, Inc. sells for $28.41 a share. The stock is expected to pay $3.30 per share next year. Eddie's has established a pattern of increasing their dividends by 5.4 percent annually and expects to continue doing so. What..

  How much will she take home under each method

Jill Meier is the sole owner of Meier Corp., which provides her only source of income. Jill has always paid herself entirely by drawing dividends fom her corporation. A friend suggested that as long as she is earning about what she would have to pay ..

  Describe the modified internal rate of return

Describe the Modified Internal Rate of Return (MIRR) method for determining a capital budgeting project's desirability. What are MIRR's strengths and weaknesses?

  External stakeholders directly affected by the project

Consider two power projects: a hydroelectric dam adn a fossil-fired generator. Which would tend to have more external stakeholders directly affected by the project? List a few.

  What is the current value of stock-after paying the dividend

World-Tour Co. has just now paid a dividend of $2.83 per share (D0); its dividends are expected to grow at a constant rate of 6% per year forever. If the required rate of return on the stock is 16%, what is the current value of the stock, after payin..

  Depreciated by the straight-line method

Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $987,000, and its economic life is five years. The machine will be fully depreciated by the straight-line method. The corp..

  Finance the investment with a variable rate mortgage

John and Sally Claussen are contemplating the purchase of a hardware store from John Duggan. The Claussens anticipate that the store will generate cash flows of $73,000 per year for 20 years. At the end of 20 years, they intend to sell the store for ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd