Explain why the dots in Figure appear to be almost randomly scattered.
Answer to relevant QuestionsYou buy a stock for $40. During the next year, it pays a dividend of $2, and its price increases to $ 44. Calculate the total dollar and total percentage return and show that each of these is the sum of the dividend and ...Why is the standard deviation of a portfolio usually smaller than the standard deviations of the assets that comprise the portfolio? In this problem we will use Fig to estimate the expected return on the stock market. To estimate the expected return, we will create a list of possible returns and we will assign a probability to each outcome. To find the ...If prices move almost at random, then why should we place any value on the CAPM, which makes predictions about expected asset returns? Kevin Federline recently inherited $1 million and has decided to invest it. His portfolio consists of the following positions in several stocks. Calculate the portfolio weights to fill in the bottom row of the table.
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