Explain an investment’s risk premium. Is there some “set” number to use in stock analysis? Explain.
Answer to relevant QuestionsPeople often understand through common sense that diversification reduces risk. But explain why diversification works and when it works most effectively. Also indicate when it may not be effective. 1. Calculating alpha values, explain if you agree or disagree with Bushkin’s selection. 2. Should the information Bart has heard about Alpha’s new product be a concern in his selection? Explain. 3. Assuming that Bart ...Explain a stock dividend and further explain if you would prefer it to a cash dividend. What are stock splits, and how desirable are they? Is a bond a loan? If it is, who is the borrower and who are the lenders? If a preferred stock (issued in perpetuity) has a price of $20 a share and pays an annual dividend of $1.50 a share, what is its current yield? Can you calculate its yield to maturity? Explain. Could you experience a capital ...
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