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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.

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The financial manager must decide how much money is needed and when, how best to use the available funds, and how to get the required financing

<h3>What is  financial manager?</h3>

Financial managers are in charge of an organization's financial health. They create financial reports, direct investment activities, and plan for their organization's long-term financial goals.

A financial manager is in charge of maintaining the proper balance of equity and debt. Funding allocation: The next step is to allocate the funds after they have been raised. The best way to allocate funds: the size of the organizations and their ability to grow.

The finance function serves two primary functions: it provides the financial information that other business functions require to function effectively and efficiently. to assist with business planning and decision making

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2 years ago
A company reports basic earnings per share of $5.10, cash dividends per share of $2.05, and a market price per share of $65.55.
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Answer:

3.13%

Explanation:

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3 years ago
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Answer:

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3 years ago
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