Stocks a and B Both Have an Expected Return of 10

question 21

Multiple Choice

Stocks A and B both have an expected return of 10% and a standard deviation of returns of 25%.Stock A has a beta of 0.8 and Stock B has a beta of 1.2.The correlation coefficient,r,between the two stocks is +0.6.Portfolio P has 50% invested in Stock A and 50% invested in B.Which of the following statements is CORRECT?

• A) Portfolio P has a standard deviation of 25% and a beta of 1.0.
• B) Based on the information we are given,and assuming those are the views of the marginal investor,it is apparent that the two stocks are in equilibrium.
• C) Portfolio P has more market risk than Stock A but less market risk than B.
• D) Stock A should have a higher expected return than Stock B as viewed by the marginal investor.
• E) Portfolio P has a coefficient of variation equal to 2.5.

Identify key dimensions of strategic farsightedness and recognize strategies that exhibit this quality.

Comprehend the roles of top management in strategy-making and the rational strategy-making mode.

Grasp the significance of scenario writing and forecasting in strategic planning.

Recognize the characteristics of a farsighted organization, including emphasis on long-term development and innovation.

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Definitions:

Ebbinghaus Curve

A mathematical formula that describes the rate at which information is forgotten over time, illustrating that memory retention decreases exponentially with time.

Business Associates

Individuals or entities engaged in commercial relationships, often working together to achieve mutual business goals.

Casual Acquaintances

People one knows slightly, but who are not close friends.

Selective Listening

The process of listening to and processing only parts of incoming auditory messages that interest the listener, often ignoring other parts.