Friend Is Considering Adding One Additional Stock to a 3-Stock

question 12

Multiple Choice

friend is considering adding one additional stock to a 3-stock portfolio, to form a 4-stock portfolioShe is highly risk averse and has asked for your adviceThe three stocks currently held all have b = 1.0, and they are perfectly positively correlated with the marketPotential new Stocks A and B both have expected returns of 15%, are in equilibrium, and are equally correlated with the market, with r = 0.75However, Stock A's standard deviation of returns is 12% versus 8% for Stock BWhich stock should this investor add to his or her portfolio, or does the choice not matter?

• A) Stock A.
• B) Stock B.
• C) Neither A nor B, as neither has a return sufficient to compensate for risk.
• D) Add A, since its beta must be lower.
• E) Either A or B, i.e., the investor should be indifferent between the two.

Identify examples of reciprocity and altruism in mutualistic interactions between species.

Analyze the conditions under which reciprocity is likely to evolve and be maintained within animal populations.

Distinguish between different motivations for helping behavior, including selfishness, kin selection, reciprocity, and altruism.

Define and understand the role of behavioral syndromes in animal behavior.

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Definitions:

Virtual Organization

An organization that primarily operates and coordinates its activities through information and communication technologies rather than in a traditional physical location.

External Strategic Alliances

Partnerships between businesses and other organizations, formed to pursue mutual goals while maintaining their independence.

Boundaryless Organizations

Companies that remove traditional barriers between departments as well as barriers between the organization and the external environment.

Internal Boundaries

Guidelines and distinctions set within an organization to delineate responsibilities, roles, and departments.