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Dovator [93]
3 years ago
6

When adding a randomly chosen new stock to an existing portfolio, the higher (or more positive) the degree of correlation betwee

n the new stock and stocks already in the portfolio, the less the additional stock will reduce the portfolio's risk.a) trueb) false
Business
1 answer:
lorasvet [3.4K]3 years ago
7 0

Answer:

true                                  

Explanation:

Assume, original stock was A. Now a new stock B is added.

Weight of Stock A in the portfolio=Wa

Weight of Stock B in the portfolio=Wb

Standard Deviation of Stock A=Sa

Standard Deviation of Stock B=Sb

Cova,b=Covariance between Aand B

Portfolio Variance=(Wa^2)*(Sa^2)+(Wb^2*Sb^2)+2*(Wa*Wb*Cova,b)

Correlation between A &B=(Cova,b/Sa*Sb)

Cova,b=Sa*Sb*(Correlation between A&B)

Hence,higher the correlation between A&B, higher will be the covariance (Cova,b).

Hence higher will be the Portfolio variance.

So, the reduction of risk will be lower.

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timama [110]

Answer:

Initiative.

Explanation:

Initiative is a personality factor which means doing things even before being told.

This ultimately implies that, an initiative refers to the ability of an individual to act by himself or herself without getting any instruction from anybody.

Initiative connotes the personality factor that influences an individual to perform an action or task without being told, urged, compelled or forced to do so.

6 0
3 years ago
Fun facts: <br> everyone is beautiful, nobody is ugly ^_^
Sergio [31]

Answer:

true

Explanation:

6 0
3 years ago
Which workplace situation requires critical thinking?
SpyIntel [72]

Answer:

ur mom

Explanation:

ur mom

5 0
3 years ago
Unlike the marketing research problem, the management decision problem
ludmilkaskok [199]
It seems that you have missed the necessary options for us to answer this question, so I had to look for it. Anyway, here is the answer. Unlike the marketing research problem, the management decision problem <span>focuses on problems that are much broader in scope. Hope this answers your question.</span>
6 0
3 years ago
Universal Waste Disposal sold 1,350,000 shares of stock at $24.62 per share. The investment banker's commission was 5% of the va
Gre4nikov [31]
The proceeds that UWD received will be as follows:
Number of shares 1,350,000
share price $24.62
Amount realized from the shares:
1,350,000×24.62
=33,237,000

Total amount to be deducted will be:
(Commission+Accounting fees+legal fees+printing costs+selling expenses)
commission=$1,661,850
Accounting fees=$450,000
legal fees=$1,225, 000
printing cost=$275,000
selling expenses=$300,000

Total=(1,661,850+450,000+1,225,000+275,000+300,000)
=$3,911,850

The amount received will be:
33,237,000-3,911,850
=$29,325,150
4 0
3 years ago
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