Based on a conversation with her husband, Grace is considering selling the $100,000 of ABC stock and acquiring $100,000 of XYZ Company common stock instead XYZ stock has the same expected return and standard deviation as ABC stock Her husband comments, It doesn 't matter whether you keep all of the...

The comment is not correct Although the standard d ...

Based on a conversation with her husband, Grace is considering selling the $100,000 of ABC stock and

Question:

Based on a conversation with her husband, Grace is considering selling the $100,000 of ABC stock and acquiring $100,000 of XYZ Company instead. XYZ stock has the same and standard deviation as ABC stock. Her husband comments, "It doesn't matter whether you keep all of the ABC stock or replace it with $100,000 of the XYZ stock." Are her husband's comments correct or incorrect? Justify your response.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...