In 2020, the world experienced the COVID-19 pandemic and the world economy suffered. Many companies (and industries) saw a severe downturn in their revenues. However there were also some companies (and industries) that improved their profits.

a. Identify one company that was negatively affected and explain the reasons why that happened.

b. Identify one company that actually prospered and explain the reasons why it did well.

c. Now assume you hold a portfolio (Portfolio A) where the purchase funds were equally distributed between the shares of two companies that you have identified in part a. and part b. Explain what signs would be the covariance and the correlation between the shares of these two companies (positive or negative).

d. Explain why creating a portfolio with multiple assets is considered an effective investment strategy. Based on your answer to this part d., was it beneficial for you to hold the Portfolio A?

Answer rating: 100% (QA)

a Covid19 has greatly affected the airline industry Most countries worldwide have embarked on imposi... View the full answer