Why is the standard deviation of a portfolio typically less than the weighted average of the standard deviations of the assets in the portfolio, while a portfolios beta equals the weighted average of the betas of the stocks in the portfolio?
Answer to relevant QuestionsIf a particular stock had no systematic risk, only un-systematic risk, what would be its expected return? Describe the scale problem and the timing problem and explain the potential effects of these problems on the choice of mutually exclusive projects, using IRR versus NPV. Erwin Enterprises has 10 million shares outstanding with a current market price of $10 per share. There is one investment available to Erwin, and its cash flows are provided below. Erwin has a cost of capital of 10 percent. ...Why do we consider changes in net working capital associated with a project to be cash inflows or out-flow rather than consider the absolute level of net working capital? Two firms in the same industry have very different equity betas. Offer two reasons why this could occur.
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