What is an asset-specific risk and how does it relate

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Reference no: EM133498609

Question 1 What is an asset-specific risk and how does it relate to portfolio diversification?

Question 2A market value-weighted index has three stocks (Tickers: ABC, DEF, and GHI). ABC is priced at $40 and has 300 shares outstanding, DEF is priced at $55 and has 200 shares outstanding, and GHI is priced at $80 and has 200 shares outstanding. Each stock originally sold for $30, $75, and $50, respectively, with 100 shares outstanding. If the base index value is 100, what is the value of the index? (two decimals)

Question 3 Novavax, Inc. (Ticker: NVAX) sells short for $51.43 per share. An investor purchases 50 shares using a 50% margin. A month later, the price falls to $40. What amount of initial equity must you have to execute the trade? What is your equity position at the end of the month (%)?

Question 4 Equity portfolios tend to have higher risk but are compensated by higher returns. Two strategies that are aggressive in nature and seek out higher returns are momentum strategies and market timing strategies. Differentiate between the two.

Question 5A market portfolio has a variance of excess returns of 0.04. Given a covariance with market excess returns of 0.05, what is the stock's beta?

Question 6 You buy 100 shares of Alphabet Inc. stock (GOOG) at $114.62 per share. Google subsequently announces a 3-for-1 stock split. How many shares of stock would you own, and what would the stock price (rounded to the nearest cent) be after the split?

Question 7 What are the basic assumptions in the CAPM theory? Which ones seem unrealistic to you?

Question 8 What are the benefits to investors when buying convertible preferred stock?

Question 9 Jake owns 30 shares of Industrial Supply Corporation's participating preferred stock. In the most recent quarter, the common stock dividend was $5.00 per share, which was greater than the dividend declared for preferred shareholders. In addition to receiving the preferred dividend, preferred shareholders are entitled to earn the amount of the common stock dividend that is in excess of the preferred stock dividend. What total amount of dividends did Jake receive this quarter?

Question 10 What types of collateral can a company pledge when it issues bonds?

Reference no: EM133498609

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