1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
SIZIF [17.4K]
3 years ago
12

You are a​ risk-averse investor who is considering investing in one of two economies. The expected return and volatility of all

stocks in both economies is the same. In the first​ economy, all stocks move togetherlong dash—in good times all prices rise​ together, and in bad times they all fall together. In the second​ economy, stock returns are independentlong dash—one stock increasing in price has no effect on the prices of other stocks. Which economy would you choose to invest​ in?
Business
1 answer:
galben [10]3 years ago
3 0

Answer:

It's best to invest in the second economy

Explanation:

The question does not provide information on the hypothetical economic expectations of the two economies, but as a risk-averse investor, it's a better idea to try to "spread" the risk instead of concentrating it.

In the first economy, conditions might or might not be good. If they are good, returns will be extraordinary because all stocks will provide good returns, but if conditions take a turn for the worse, all stocks prices will fall and the financial consequences will be catastrophic.

In the second economy, results might never be as good as in the first economy, but they also will not ever be as bad. The risk is spread between various stocks, and while some may fall in price, others will rise, and viceversa. For a risk-adverse investor, this a far better option.

You might be interested in
What is the formula to work out profit
Nitella [24]

The main feature of this lesson is the equation P(x) = R(x) - C(x). Other important equations to remember are as follows: The breakeven point is when revenue equals cost, or when the profit is zero. Maximum profit will occur when marginal revenue equals marginal cost, or when the marginal profit is zero.

7 0
2 years ago
You recently purchased a stock that is expected to earn 30 percent in a booming economy, 9 percent in a normal economy, and lose
sergiy2304 [10]
Took me a bit to understand what this is. I have no business sense at all.

Expected Rate of Return = 30%*5% + 9%*75% - 33% * (100 - 75 -5)%
Expected Rate of Return = 0.015 + 0.0675 - 33%*20%
Expected Rate of Return = 0.015 + 0.0675 - 0.066
Expected Rate of Return = 0.0165

This then is expressed as a %
0.0165 = 1.65 % Sounds like you are buying a US short term treasury.
If anyone else answers, take their answer.
 
3 0
3 years ago
What is an apprenticeship?
san4es73 [151]
B. Formal training that combines classroom instruction with learning on the job.

That's how I've understood it when I took business in high school.
7 0
3 years ago
Read 2 more answers
Ethical dilemma ethical lapse
makkiz [27]

Answer:

An ethical lapse is a mistake or error in judgement that produces a harmful outcome (Roslyn Frenz, n.d., para. ... Otherwise there are grave consequences for such ethical lapses and could result in widespread harm to the company and to the society at large.

In both situations presented, I believe them to be ethical dilemmas. An ethical dilemma is considered to be a problem between two possibilities that are not acceptable or preferable. Making a choice between the two would result in hurting the other. Employing the child is wrong because of labor laws, but the child is able to provide for themselves because of it. Taking away the employment would make the child homeless and hungry. The second scenario is also a dilemma because you run the risks of loosing profits if you do things the correct way. Neither choice would result in a preferable outcome. Doing the right thing sometimes comes with a price.

Explanation:

Examples of ethical lapses include business-related misconduct such as fraud, bribery, insider trading, and environmental disasters involving negligence or recklessness. They also include personal ethical misconduct, such as inflated résumés and sexual indiscretions.

5 0
3 years ago
What is the total taxable interest income shown on line 8a of form 1040?
Komok [63]
Pajak $5277 $7282 wang
7 0
3 years ago
Other questions:
  • A high-definition tv costs a company $3,300 to manufacture. if it sells for $6,732, what is the percent markup based on cost? (r
    15·1 answer
  • A music school has budgeted to purchase three musical instruments. they plan to purchase a piano costing $3,000, a guitar costin
    9·1 answer
  • Why should a pencil never be used as a tool when working inside a computer?
    7·1 answer
  • 1. Assume you are planning to invest $200 each year for four years and will earn 8 percent per year. Determine the future value
    6·2 answers
  • Aaron promises to sell his boat to Matt, and Matt promises to buy it from Aaron. What type of contract is this? Group of answer
    14·1 answer
  • The risk-free rate is 2.3 percent and the market expected return is 12 percent. What is the expected return of a stock that has
    6·1 answer
  • Ten years ago, Ginny inherited $50,000 from her grandmother. She decided to invest all of this money in GE stock. Suppose she de
    13·1 answer
  • On February 12, Quality Carpet Inc., a carpet wholesaler, issued for cash 1,000,000 shares of no-par common stock (with a stated
    12·1 answer
  • Ford's decision to completely redesign its ford taurus can be classified as a
    5·1 answer
  • What is the study of business​
    11·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!