You Are Considering Investing in One of These Three Stocks

question 113

Multiple Choice

You are considering investing in one of these three stocks: $\begin{array}{ccc}\text { Stock } & \text { Standard Deviation } & \text { Beta } \\\mathrm{A} & 20 \% & 0.59 \\\mathrm{~B} & 10 \% & 0.61 \\\mathrm{C} & 12 \% & 1.29\end{array}$
If you are a strict risk minimizer, you would choose Stock ____ if it is to be held in isolation and Stock ____ if it is to be held as part of a well-diversified portfolio.

• A) a; b.
• B) b; a.
• C) c; a.
• D) c; b.
• E) a; a.

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Definitions:

Linear Programming

An optimization method for achieving the best outcome in a mathematical model whose requirements are represented by linear relationships.

Holding Costs

Expenses associated with storing inventory over a certain period, including warehousing, insurance, depreciation, and opportunity costs, among others.

Level Scheduling

is a production strategy aimed at producing goods at a consistent rate, balancing production output with customer demand to minimize inventory costs and optimize operational efficiency.

Aggregate Planning Horizon

The timeframe over which a company plans its overall production levels and inventory positions to meet forecasted demand, typically ranging from 3 to 18 months.