Assume that a risk averse investor owning stock in Miller Corporation decides to add the stock of either Mac or Green Corporation to her portfolio All three stocks offer the same expected return and total variability The covariance of return between Miller and Mac is 05 and between Miller and Green...

Decline more when the investor buys Mac Answer of this question ...

Assume that a risk-averse investor owning stock in Miller Corporation decides to add the stock of either

Question:

Assume that a risk-averse investor owning stock in Miller decides to add the stock of either Mac or Green to her All three offer the same and total variability. The covariance of return between Miller and Mac is -.05 and between Miller and Green is -.05. risk is expected to:
a. Decline more when the investor buys Mac.
b. Decline more when the investor buys Green.
c. Increase when either Mac or Green is bought.
d. Decline or increase, depending on other factors.

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...